Embed Size (px)
Citation preview
FBR
Quarterly
Review Vol. 7, No. 4, April – June 2008
A Review of Resource Mobilization Efforts of
Federal Board of Revenue
FEDERAL BOARD OF REVENUE
Government of Pakistan Constitution Avenue
Islamabad - Pakistan
i55 - i -
i
Editor:
Mumtaz Haider Rizvi
Member, Fiscal Research & Statistics
Fiscal Research and Statistics Wing
e-mail: [email protected]
Phone: (051)-920-4436
Fax: (051)-921-9211
October: 2008
ii55 - ii -
ii
Fiscal Research and Statistics Wing
Federal Board of Revenue
Research Team
1. Mumtaz Haider Rizvi
Member, Fiscal Research and Statistics
2. Robina Ather Ahmed
Chief (FR&S)
3. Umar Wahid
Secretary (FR&S-I)
4. Sharfuddin Pirzada
Secretary (FR&S-II)
5. Shafiq Mohammad
Secretary (FR&S)
6. Mir Ahmed Khan
Second Secretary (FR&S-I)
7. Naeem Ahmed
Second Secretary (FR&S-II)
8. M. Junaid Jalil Khan
Second Secretary (FR&S)
iii55 - iii -
iii
Foreword
Federal Board of Revenue collected taxes amounting to Rs.1007.2 billion during the year
2007-08, thus crossing the barrier of one trillion rupees. This achievement is indicative of
taxpayers’ confidence in improved tax structure and tax administration.
The present publication of the FBR Quarterly Review presents a comprehensive
analysis of the four federal taxes administered by FBR during FY: 2007-08. It includes an Ex Post
analysis of budgetary measures of FY: 07-08 to evaluate the various aspects of tax policy
framework. As the FBR is going through the reform process therefore, an update on reforms has also
been presented in this quarterly review.
I commend the efforts of Fiscal, Research and Statistics (FR&S) Wing, FBR for compilation of
FBR Quarterly Review.
(Ahmad Waqar)
Secretary Revenue Division/Chairman, FBR
iv55 - iv -
iv
Contents
Pages
Foreword iii
Abbreviations v
I. FBR Tax Collection: An Analysis of FY: 07-08 Outcome 1
O The Economy 1
O FBR Revenue Collection Relative to Target 1
O Revenue Collection in FY: 07-08 vis-à-vis FY: 06-07 2
O Head-Wise Analysis 3
O Direct Taxes 3
O Sales Tax 8
O Customs 13
O Federal Excise Duties 17
O Projections for FY: 08-09 21
II. Impact Evaluation: An Ex Post Analysis 23
of Budgetary Measures of FY: 07-08
III. FBR Reform Program: 30
An Update on Tax Administration Reforms
Statistical Appendix 41
v55 - v -
v
Abbreviations FBR
DT
CD
GST
STM
STD
FED
WHT
VP
CoD
AOPs
NTN
USAS
WCO
PCT
TARP
BPR
STARR
MCC
RTO
LTU
FY
CFY
PFY
Federal Board of Revenue
Direct Taxes
Customs Duties
General Sales Tax
Sales Tax Import
Sales Tax Domestic
Federal Excise Duties
Withholding Taxes
Voluntary Payments
Collection on Demand
Association of Persons
National Tax Number
Universal Self-Assessment Scheme
World Customs Organization
Pakistan Customs Tariff
Tax Administration Reform Project
Business Process Reengineering
Sales Tax Automated Refund Repository
Model Customs Collectorate
Regional Tax Office
Large Tax Payers’ Unit
Fiscal Year
Current Fiscal Year
Previous Fiscal Year
155 - 1 -
1
I
FBR Tax Collection:
An Analysis of the FY: 07-08 Outturn1
The Economy
The entire World has witnessed the economic turmoil on account of steep rise in prices of
petroleum and primary products. However, in Pakistan the severity of macroeconomic pressure
has been felt with great pain. The outgoing FY: 07-08 was a volatile year for Pakistan’s
economy both on domestic and external fronts. Number of unfavorable and unexpected events
occurred during the years, which include: political unrest, law and order situation, supply
shock, rising oil, food and other essentials prices, and crisis in the international financial
market, together with shortcomings in economic management. All these events have adversely
affected the key macroeconomic fundamentals of Pakistan. The economy suffered a setback as
GDP registered a growth of 5.8% against the target of 7.2% and a growth rate of 6.8% in FY:
06-07. The major sectors, agriculture and manufacturing lagged behind. Fortunately, the set
targets and economic growth in 2007-08 is primarily stemmed from better than expected
growth of services sector, posting a growth of 8.2% as against 7.6% last year.
The fiscal position has worsened on account of internal and external pressures and monetary
and fiscal mismanagement. The overall fiscal deficit, due to sharp increase of current
expenditure has missed the target of 4% of the GDP and landed above 5% of the GDP.
Pakistan economy is currently facing four major challenges: one deceleration in growth,
second rising inflation, third growing fiscal deficit and fourth the un favorable widening gap in
merchandise trade. Therefore, the challenges need to be addressed immediately with proper
fiscal and monetary polices and strong political will to overcome severe economic problems.
No doubt the current economic crisis is a big challenge for new government and fiscal
managers but strong resolve and appropriate policy intervention would be a key to success.
FBR Revenue Collection Relative to Target
The FY: 07-08, was a difficult year for FBR as a challenging target of Rs. 1025 billion was
assigned. To reach the target, the required overall growth was 21% over the collection of Rs.
847.2 billion collected during FY: 06-07. Unfortunately, events like political unrest, load
shedding throughout the country together with soaring inflation particularly food inflation has
seriously hampered the manufacturing sector and general consumers at large. This situation
has led to declining growth in the large and small scale manufacturing sectors, reduction in
consumption and investment in the country, resultantly revenue realization efforts has
1 The analysis has been prepared by the research team of the Fiscal Research Wing of FBR.
255 - 2 -
2
seriously been hampered. Thus the revenue target was revised downward to Rs. 1,000
billion with a shortfall of Rs. 18 billion against the original target of Rs. 1,025 billion.
However, in spite of these adversaries FBR has been able to successfully cross the
psychological mark of Rs. one trillion at the end of the year, by collecting Rs. 1007.2
billion. It is encouraging to note that the target achievement has been broad based as
all the four taxes administered by FBR have achieved their respective revised targets
(Table 1).
Table 1: A Comparison of Collection vis-à-vis
Original and Revised Targets 2007-08
Rs in Billion
Original
Targets (Rs. Billion)
Revised
Targets (Rs. Billion)
Collection:
07-08 (Rs. Billion)
Difference from
Revised Targets
Absolute Percent
Direct Taxes 405.0 385.0 387.5 2.5 0.7
Sales Tax (GST) 382.0 375.0 376.9 1.9 0.5
Federal Excise 98.0 92.0 92.2 0.2 0.2
Customs Duties 140.0 148.0 150.6 2.6 1.7
All Taxes 1025.0 1000.0 1007.2 7.2 0.7
Source: FBR Data Bank
Revenue Collection in FY: 07-08 Vis-à-Vis FY: 06-07
A comparison of net collection for FY: 07-08 and FY: 06-07 confirms a healthy
growth of 18.9% in federal receipts (Table 2). In fact, an increase of Rs. 160 billion
over last year collection has been the largest in a single year since FY: 47-48. This
increase (in absolute terms) exceeds the previously recorded highest collection of Rs.
134 billion of FY: 06-07 by about 15%. An important aspect of this growth has been
the broad based performance exhibited by all the four taxes particularly; federal
excise has registered a vibrant growth of 28.4%, followed by sales tax 21.8%, well
consistent with domestic demand and the overall strength of the economy. On the
other hand direct taxes and customs duty have recorded healthy growth of 16.1% and
13.8% respectively.
Table 2: A Comparison of Net Collection
in FY: 07-08 vis-à-vis FY: 06-07
Collection (Rs. Billion) Difference
FY: 07-08 FY: 06-07 Absolute Percent
Direct Taxes 387.5 333.7 53.8 16.1
Sales Tax (GST) 376.9 309.4 67.5 21.8
Federal Excise 92.2 71.8 20.4 28.4
Customs Duties 150.6 132.3 18.3 13.8
All Taxes 1007.2 847.2 160.0 18.9
Source: FBR Data Bank
355 - 3 -
3
It is relevant to mention that while the growth of the federal tax receipts has been
substantial in absolute terms, it has lagged behind the (nominal) growth of the GDP
and thereby the FBR Revenue to GDP ratio has declined from 9.7% in FY: 06-07 to
9.6% in FY: 07-08. A number of factors have contributed towards this decline. The
most significant among them are the sad demise of Benazir Bhutto disturbed political
condition, unstable law and order situation together with load shedding, soaring
inflation and turmoil in the international financial markets. All these factors have
adversely impacted the key economic indicators during the FY: 07-08. Economic
growth at 5.8% remained below the target of 7.2%. The manufacturing sector fell
short by 5.5% of the target of 10.9%. Since revenue realization is linked with the
overall macroeconomic condition, therefore the revenue collection process also
slowed down and FBR also faced Rs. 18 billion shortfalls against the original target
from Rs. 1,025. Other factors like, narrow tax base, administrative weaknesses despite
some progress to overcome them, and the inherent inefficiencies in the system also
played crucial role during FY: 07-08.
Head-Wise Analysis
It is encouraging that the target of Rs. 1,000 billion has been surpassed by about 1%.
All the four taxes have achieved their respective targets together with achievement of
double digit growth in collection during FY: 07-08. The tax-wise details are provided
in the following.
Direct Taxes: The direct taxes have emerged the major source of federal tax revenues
for the last two years. This source has contributed 38.6% of total receipts during FY:
07-08. The net collection has been Rs. 387.5 billion against the yearly target of Rs.
385 billion. An amount of Rs. 25.8 billion refunds have been paid back to the refunds
claimants as against Rs. 32.2 billion refund paid during FY: 06-07. The declining
trend in refund payments indicates that the stock of arrears has been reduced and the
income tax department is current with the refund cases. It may be recalled that the
collection of direct taxes comprises of income tax and other direct taxes (Capital
Value Tax, Worker Welfare Fund and Worker Participatory fund). The contribution
of income tax in total direct taxes has been 94%. Therefore our main focus would be
on the income tax.
The structure of income tax is based on withholding taxes (WHT), voluntary
payments (VP) and collection on demand (COD). The collection during FY: 07-08
shows that the share of WHT, VP and COD in gross collection has been 52.3 %, 36.8
% and 10.9% respectively. Whereas, the contribution of WHT remains historically
high, the change in the configuration of other two components is inconsistent with the
way the taxation system has been re-designed in recent years. It was anticipated that
with the introduction of USAS, more reliance would be on VP, rather than WHT and
COD. Detailed discussion on these components is presented in Table 3.
455 - 4 -
4
Table 3: Head-wise Performance of Direct Taxes (Rs. Billion)
2007-08 2006-07 Change (%)
Voluntary Payments 145.5 165.7 -12.2
Collection on Demand 42.9 11.2 283.0
Deductions at Source (WHT) 206.6 170.9 20.9
Gross Receipts 395.0 347.8 13.6
Refunds 25.8 32.2 -19.9
Other DT 18.3 18.1 6.1
Net Direct Taxes 387.5 333.7 16.4
If we look at the performance of direct taxes in a historical perspective the improved
tax effort and effective implementation of tax policy and administrative reforms has
geared up the collection over the years. The share of direct taxes in federal tax receipts
has increased from around 15% in early 1990s to 32% in FY: 00-01. It has touched
new heights of 39.4% in FY: 06-07, but slightly declined to 38.6% in FY: 07-08
(Graph 1). Similarly, the growth pattern which was uneven but on the rise during the
past few years, has also declined from 48.3% in FY: 06-07 to 16.1% in FY: 07-08. A
number of reasons are there for this slowdown in revenue realization. Apart from
political unrest, strikes and load-shedding during the period under review, the major
set back has been due to significant reduction in voluntary compliance. Payment with
returns has declined by 80.9% disturbing the entire pattern of the collection, while
advance tax has gain 16.5% growth reducing the deficit to a certain extent and the
overall negative growth has ended up at 11.9% only.
On a positive note it may safely be said that one of the implications has been that
direct taxes have now emerged as the leading revenue contributors of federal taxation
receipts - a transition that had always been desired on equity and efficiency grounds.
Graph 1: Historical performance of Direct Taxes
8.7 11.1
22.7
48.3
16.4
31.7 31.1 31.5
39.4 38.6
0
10
20
30
40
50
60
2003-04 2004-05 2005-06 2006-07 2007-08
Growth(%) Share(%)
Analysis of Components of Direct Taxes
Voluntary Payments (VP): This component includes payments with return and
advances. In net terms, Rs. 145.5 billion have been generated during FY: 07-08 as
compared to Rs. 165.7 billion in the corresponding period last year. Thus, around
555 - 5 -
5
12% decline has been witnessed in collection from this important component. It may
be recalled that the basic objective behind implementation of USAS was to minimize
interface between the taxpayer and tax administration, repose confidence in the
system and eliminate the element of corruption. It was anticipated that voluntary
compliance will play an important role in maintaining overall equity in the taxation
system as well, because the incidence of presumptive taxes is fairly debatable. No
doubt, that the USAS has been successful since its implementation in achieving these
objectives. Till FY: 06-07, VP had emerged as a leading source of revenue. However,
FY: 07-08 was quite difficult and the analysis reveals that payments with return have
declined by 81%. A paltry sum of Rs. 9.2 billion with returns have been collected in
FY: 07-08 against Rs. 48.6 billion in FY: 06-07, and consequently its share in total
VP has plunged to 6.3% from 29.3%. The second component of VP, i.e., advance
payments has also not grown significantly during the period under review. During
FY: 07-08 Rs. 136.3 billion were collected against Rs. 117.1 billion in FY: 06-07,
indicating a growth of 16.4% (Table-4).
Table 4: Collection of Income Tax by Voluntary Compliance (Rs. Billion)
Collection
2007-08
Collection
2006-07
Change
(%)
Voluntary Payments (A+B) 145.5 165.7 -12.2
A) With Returns 9.2 48.6 -81.0
B ) Advance Tax 136.3 117.1 16.4
The possible reasons for the shortfall in the collection of income and corporate taxes
are: (i) the change in the advance tax regime made last year has grossly affected the
tax paid with the returns; (ii) the advance tax scheme in vogue envisages ‘Pay as you
Earn’, thereby reducing substantially tax payable with the returns; and (iii) Lesser
collection of advance tax vis-à-vis anticipated growth owing to improper declarations
by large taxpayers.
Sectoral Analysis of Advance Tax Payments: The sectoral composition of advance tax
payments is presented in Table 5. It is evident that these payments relate to few
corporate entities categorized within the Oil & Gas Sector, Financial Institutions;
mainly Banks, Telecom Sector, Pharmaceutical and Transportation sectors. These five
sectors have contributed 74% of advance taxes in FY: 07-08. It may not be out of
place to mention that around 71% of the total advance taxes are paid by three sectors,
namely Oil & Gas (47.9%), Banks (20.5%) and Telecommunication (5.8%).
Furthermore, barring the telecom and banking sectors, the remaining three sectors had
made substantially higher payments than last year.
655 - 6 -
6
Table 5: Comparison of Advance Tax Payments (Rs. Billion)
Sectors
Payments
2007-08
Share
(%)
Payments
2006-07
Share
(%)
Growth
(%)
Oil &Gas 64.8 47.5 47.9 40.9 35.2
Banking 28.0 20.5 29.8 25.5 -6.0
Telecommunication 4.4 3.2 6.8 5.8 -35.3
Automobiles 1.3 1.0 2.1 1.8 -38.1
Transportation 1.8 1.3 0.4 0.3 350.0
Engineering 1.5 1.1 1.1 0.9 36.4
Tobacco 1.2 0.9 1.7 1.5 -29.4
Textile 1.5 1.1 1.1 0.9 36.4
Pharmaceutical 2.1 1.6 1.8 1.5 16.7
Chemicals 1.0 0.7 1.6 1.4 -37.5
Sub Total 107.6 78.9 94.3 80.5 14.1
Others 28.7 21.1 22.8 19.5 25.9
Total 136.3 100.0 117.1 100.0 16.4
However, despite contribution, the annual growth in payments by these sectors during
FY: 07-08 has slowed down. The reduced payment by the banking sector has been
due to change in regulation under which the forced sale value benefit against all non-
performing loans for calculating provisioning requirement was abolished altogether
from December 2007. On the other hand, increased development expenditure in the
telecommunication sector and extra spending by PTCL on account of Voluntary
Separation Scheme (VSS) has resulted into a decline in taxable income and advance
payments. Since most of these have incurred a one-time cost on these sectors, this
phenomenon is not expected to be repeated in coming years.
Income Tax Returns Analysis: The number of Income Tax Returns and statements
received by the end of FY: 07-08 were 2,139,397, higher by 327,046 as compared to
the corresponding period last year, indicating a growth of about 18%. There has been
decrease in the number of returns by 1.2%, the statements have increased by 32.7%
(Table 6). On the other hand, the total tax received has declined sharply to Rs. 9.2
billion against Rs. 48.6 billion, thereby registering a substantial decline in growth.
The number of corporate returns has slightly increased from 15,481 during FY: 06-07
to 15,871 in FY: 07-08, however the collection with corporate returns has dropped
from Rs. 42.6 billion to Rs. 7.6 billion. A similar outcome has been noticed for other
categories of taxpayers including individuals, and AOPs. In respect of the statements,
despite a rise in number, by 32.7%, the collection has declined by around 5.9% which
also needs deeper analysis.
755 - 7 -
7
Table 6: Analysis of Returns/Statements
2007-08 2006-07 Growth (%)
Returns
Corporate 15871 15481 2.5
AOP 25349 34735 -27.0
Salary 103086 76465 34.8
Non-Salary 628693 655876 -4.1
Sub-total Returns 772999 782557 -1.2
Statements
Salary Certificates 82857 248261 -66.6
Employers Statements 1169280 542389 115.5
Employer/Employee
Response 1252137 790650 58.4
Importers 15436 12652 22.0
Exporters 10225 14561 -2.5
Retailers 36394 37310 -29.8
Contractors/ Suppliers 32168 58363 -44.9
Other 20039 16258 23.3
Sub-total Statements 1366398 1029794 32.7
Grand Total 2139397 1812351 18.0
Note: Figures for FY: 07-08 are provisional and subject to revision.
As already mentioned, the change introduced in the tax system has certainly affected
the collection but the sharp reduction in collection under VP appears to be on the
higher side. It seems that, the USAS is on track as it has been functioning successfully
for the past few years and yielded substantial revenue through it. However, the
problem lies with audit which needs to be initiated for selected corporate cases. The
efforts made by the LTUs need to be strengthened so that delinquent taxpayers are
identified. It is relevant to mention that the planning stage has been over; full
implementation of audit program should not be delayed any further, especially when
there is strong evidence of low voluntary compliance due to inadmissible claims. At
the same time it is also essential to have effective enforcement in place.
Unfortunately, the enormous gap between corporations who have got NTN and those
who file returns and nearly two thirds of the corporations declaring nil income and
business losses within those who file returns are ‘known’ facts for quite some time.
Now the process of re-organization of field formations has been completed, the
processing of returns for raising demand in a professional manner should not be
delayed any further. Here again, the audit teams will have to take the leadership role,
which unfortunately remains a missing link in the entire equation.
Withholding Taxes (WHT): WHT continues to be the leading source of direct tax
receipts in view of the large undocumented sector of the economy. However, despite
its large contribution, there is ample scope to enhance this collection further. The
WHT collection during FY: 07-08 has been Rs. 206.6 billion against Rs. 170.9 billion
855 - 8 -
8
during FY: 06-07, indicating a healthy growth of 21%. The ten major withholding
taxes constituting 91.5% of total WHT collection remain the same as before (Table 7).
These are: contracts, imports, salary, telephone, export, securities, electricity,
dividends and cash withdrawal (Table 8). The share of contracts (37.0%) remains at
the top, followed by imports (13.1%), salary (10.9%), telephones (8.7%), exports
(5.6%), securities (6.8%), electricity (2.9%), dividends (3.1%), and cash withdrawal
(3%).
The highest growth in WHT collection has been from dividends (47.7%) followed by
telecommunication (40.3%), Salary (35.3%) contracts (29.4%) and cash withdrawal
(29.2%). This outcome reinforces the existing belief that the financial and
telecommunication sectors remain vibrant despite inflationary tendencies in the
country. Rationalization of income tax rate for the salaried individuals and enhanced
salary packages, especially in the private sector, has yielded higher revenue.
Similarly, the recent spike in international trade activities has been instrumental in
raising the WHT receipts on account of imports and exports.
The improved corporate profitability has been instrumental in higher collection from
dividends. Finally, deductions on savings instruments have increased due to enhanced
profits.
Table 7: Deductions at Source:
A Comparison of FY: 07-08 & FY: 06-07 Collection (Rs .Billion)
2007-08 2006-07 Change (%)
Contracts 76.5 59.1 29.4
Imports 27.7 25.8 7.4
Salary 22.6 16.7 35.3
Exports 11.5 10.9 5.5
Telephone Bills 18.1 12.9 40.3
Securities 14.1 13.7 2.9
Electricity Bills 5.9 5.2 13.5
Dividends 6.5 4.4 47.7
Cash Withdrawal 6.2 4.8 29.2
Sub-Total 189.1 153.5 23.2
Other WHT 17.5 17.4 0.5
Total WHT 206.6 170.9 20.9
Sales Tax: GST is the second major source of federal tax revenues collection after
direct taxes. During FY: 07-08, the gross and net collection of sales tax stood at Rs.
405.1 billion and Rs. 376.9 billion respectively, entailing growth of 16.9% and 21.8%
over last year. The revised target of sales tax has been achieved to the extent of
100.2%. The share of sales tax in total tax collection has also increased from 36.5% in
955 - 9 -
9
FY: 06-07 to 37.6% during FY: 07-08. The decline of Rs. 8.9 billion in refund
payments has contributed around Rs. 4.9 percentage points in overall growth of sales
tax. The performance of sales tax by components is presented in the following Table
8.
Table 8: Collection and Growth of GST: FY: 07-08 (Rs. Billion)
Sources of GST Collection/ Refunds Growth (%)
Gross Refund Net Gross Refund Net
Import Stage 195.4 0.0 195.4 11.1 25.4 11.1
Domestic Production
& Sales 209.7 28.1 181.6 22.0 -24.0 36.0
GST (Total) 405.1 28.1 376.9 16.9 -23.9 21.8
Sales Tax Domestic Collection and Major Revenue Spinners: An overview of the
sales tax (domestic) collection indicates that the tax base of GST remains highly
concentrated as only top two commodities have contributed around 51% in total STD
collection whereas the top ten commodities have generated 81% during the FY: 07-
08. The major revenue spinners include POL products, telecom services, natural gas,
sugar, cigarettes, iron & steel, services, electrical energy, beverages, cement(Table 9).
Analysis of individual sectors shows that the major contribution has been from POL
products posting a growth of above 80% in its collection during the period under
review. The main factors behind this unprecedented performance has been i) decaping
the impact of rise in prices of POL and ii) the zero rating of crude oil at import stage
on 30th November 2007. Earlier, sales tax used to be charged on crude oil at import
stage and later adjusted against the inputs claim while compiling the sales tax liability
against the refined products of POL. After this measure, the refineries have been
relieved of getting their money stuck since the import of crude oil as now they pay
tax at the time of sales of their product. On the other hand, it has also minimized the
chances of evasion on account of value addition of the products. Despite a time lag of
two months period in translation of impact of zero rating on sales tax collection at
domestic stage, the increase in collection has been spectacular. The average increase
in collection from POL during last five months i.e., February 2008 to June 2008 has
been around 174%.
The telecom sector continued its notable performance with above 20% growth in
collection during the FY: 07-08. The tempo of development and economic activities
gives impetus to the collection from this source. So far 59% tele-density till FY: 07-
08 indicates the availability of further scope of expansion in this industry. The recent
move by the government to get disabled all the un-notified/un-registered SIMS, may
have an adverse effect in collection of sales tax due to the huge size of unregistered
SIMS, however, organized management of this sector will have a far reaching positive
1055 - 10 -
10
impacts on administrative as well as economic spectrum and will certainly pay the
dividend in the long run.
A nominal growth in collection from natural gas is attributed to various factors i.e., i)
withdrawal of business by a major unit namely Occidental Gas from the extraction
activities, which contributed over one billion of sales tax last year, ii) decline in sales
tax payment by the leading unit of the industry holding over 40% in collection, and
iii) unusual refund payments to SSGPL during the reference period. A significant
addition by the SNGPL could hardly compensate for the shortfall in collection
pattern. The collection from sugar has improved during the last three months of FY:
07-08 and has posted a modest growth of 10% that indicates the positive impacts of
special audit conducted during the period. The growth in collection from cigarette is
in line with projection estimates. The factors like increase in prices on account of
increase in excise duty rates and growth in production contributed positively.
The collection from iron & steel has been phenomenal during FY: 07-08 (168%), and
mainly attributed to the policy intervention in the budget 2007-08. The sales tax is
being charged on the basis of electricity consumed at the rate of Rs.4.15/unit and
being collected by the electricity billing agencies i.e., WAPDA and KESC. This
change has significantly facilitated the sales tax collection from iron & steel units and
reduced the tax evasion. The overall performance of services has been encouraging
with above 20% growth in collection which is associated with better contribution by
airlines, courier and media services. This performance has been despite a decline in
collection from prominent hotel and restaurant industry units during the period under
review. The decline in collection from electrical energy is as per expectation because
FBR opted for the policy of net rather than gross collection. This policy intervention
has reduced the refund payments by almost 11 billion in FY: 07-08. The modest
growth in collection from automotive industry (Motor cars/Motorcycles/Auto Parts) is
indicative of the fact that the boom in the industry prevailed during FY: 06-07 is
almost over as the major factor for the boom i.e., the financial support by the financial
institutions is no more available on cheaper rates. Therefore, the tempo of production
in automobile industry has slowed down during the period. A healthy growth in
collection from beverages is the impact of increase in prices as well as the continued
demand for the branded beverages products.
1155 - 11 -
11
Table 9: Comparison of Sales Tax Domestic (Gross) Collection by
Major Commodity: FY: 07-08 & FY: 06-07 (Rs. Million)
Major Commodities Collection
2007-08
Collection
2006-07
Growth
Realized
(%)
Share
(%)
POL Products 60,481 32,072 88.6 29.0
Services by Telecom Sector 45,485 36,868 23.4 21.8
Natural Gas 15,412 15,138 1.8 7.4
Sugar 12,251 11,143 9.9 5.9
Cigarettes 7,861 6,942 13.2 3.8
Iron & Steel Products 6,690 2,494 168.2 3.2
Services 6,126 4,968 23.3 2.9
Electrical Energy 5,886 13,010 -54.5 2.8
Motor cars/Motorcycles/ Auto Parts 5,345 5,071 5.4 2.6
Aerated Waters/Beverages 4,419 3,215 37.4 2.1
Sub-Total 169,956 130,921 29.8 81.5
Others 38,621 39,524 -2.3 18.5
Gross Collection 208,577 170,445 22.4 100.0
Sales Tax at Import Stage: The collection of sales tax at imports depends on the value
of imports. A healthy growth of 35.7% in value of imports has been observed during
FY: 07-08 as compared to 8.1% in FY: 06-07. However, significant import of zero-
rated raw material and zero rating of crude oil on 30th November 2007 vide SRO
No.1164(1)/2007 has affected the growth tempo of sales tax at import stage.
The gross collection of sales tax import has contributed around 48.4% in the total sales
tax collection during FY: 07-08. However, its share has increased to 52% in net terms
as all the refund claims are entertained from the domestic collection of sales tax. The
collection of sales tax imports stood at Rs.195.4 billion entailing a growth of 11.1% as
compared to last year. The fifteen major commodity groups have contributed around
87% of total ST(M) collection. The collection of ST(M) also remained highly
concentrated and the imports of a small number of commodity groups plays a vital role
in total collection, indicating the level of its vulnerability. In fact, only POL has
contributed 38% of the total ST(M) collection. The remaining of the top fifteen revenue
spinners, each has shared less than 8%.
A double digit growth has been recorded in collection from edible oil, plastic products,
electrical machinery, organic chemicals, paper and paper board and oil seeds. However,
the collection from vehicles and machinery have declined marginally i.e., by 4.4% and
0.4% respectively. The collection from POL products has exhibited a nominal growth
of 2.5% only. The main reason of this apparent low growth is, as stated earlier, zero
rating of crude oil for the purpose of sales tax as per above mentioned SRO. The
significant increase of above 70% in collection from edible oil is due to continued
1255 - 12 -
12
increase in international prices of the products. In the budget 2007-08, a bulk of the
plastic products rates were increased from 15% to 20 %. Additional revenue of Rs. 4.6
billion has been collected from plastic products indicating around 46% growth in
collection as compared to last year. In case of collection from Iron & steel (Ch.72)
imports, despite above 30% increase in value term, sales tax collection has observed a
nominal growth of only 1.2%. The outcome is mainly attributed to the huge imports of
zero rated scrap during the period under review. On the other hand, a significant
increase in imports of electric generating sets and rotary converters, multi-station
access units, sim cards, monitors and energy saving lamps have posted a positive
impact in sales tax collection entailing above 30% growth in collection from electrical
machinery. Around 39% growth in collection from organic chemicals bears the
combined impact of above 20% increase in value of imports as well as increase in sales
tax rates of sub-chapters 29032100 and 29051100 from 15% to 20%. The growth in
collection from paper and paper board has been more than the increase in value term
mainly because of increase in rate of sales tax from 15% to 20%. The collection from
misc. chemicals, articles of iron & steel and rubber products has been consistent with
the growth in imports. The imports of aluminum products posted a positive growth of
6.8% in collection of sales tax despite a decline in its value by 15%,
indicating the imports of higher slab products (Table 10).
Table 10: Collection of Sales Tax (Import) - Major Items (Rs. Million)
Description Collection
2007-08
Collection
2006-07
Realized
Growth (%) Share (%)
POL Products (27) 74,266 72,455 2.5 38.0
Edible Oil (15) 15,440 9,029 71.0 7.9
Plastic (39) 14,627 10,023 45.9 7.5
Vehicles and Parts (87) 13,538 14,156 -4.4 6.9
Iron and Steel (72) 11,573 11,438 1.2 5.9
Mechanical Machinery (84) 7,383 7,409 -0.4 3.8
Electrical Machinery (85) 6,964 5,354 30.1 3.6
Organic Chemicals (29) 5,313 3,816 39.2 2.7
Paper & P. Board (48) 4,835 3,646 32.6 2.5
Oil seeds etc (12) 3,783 3,432 10.2 1.9
Misc Chemicals Products (38) 3,199 2,698 18.6 1.6
Rubber (40) 2,514 2,171 15.8 1.3
Coffee, Tea, and Spices (9) 2,468 2,403 2.7 1.3
Aluminum Products (76) 2,243 2,100 6.8 1.1
Articles of Iron & Steel (73) 1,817 1,313 38.4 0.9
Sub Total 169,964 151,443 12.2 87.0
Other 25,478 24,537 3.8 13.0
Gross 195,442 175,980 11.1 100.0
Refund/Rebate 89 71 25.4
Net 195,353 175,909 11.1
1355 - 13 -
13
Customs Duties: Under the on-going policy and tax reforms, Pakistan customs has
also undergone through a transformation from primitive to modern customs
administration. The introduction of self-assessment in the customs is a clear departure
from the old system. It is a manifestation of the resolve of the government to repose
confidence on the taxpayers. Moreover, end to end automation, prompt clearances and
taxpayers’ facilitation are some of accomplishments of the modernized customs. In
the process, an effort has also been made to revamp the tariff structure to bring
conformity to the standard of World Customs Organization (WCO). In this regard,
adoption of Harmonized Commodity Description and Coding System-2007 Version is
a significant step by Pakistan Customs. Necessary amendments have been made in the
Pakistan Customs Tariff (PCT) and SROs to conform them to HS 2007. The matter of
tariff escalation has properly been dealt i.e. primary raw materials have been
subjected to @ 0-5%, secondary raw materials @ 5-10% and finished goods@ 20-
25%. Moreover, a new slab of 0% has also been introduced by shifting 0% duty from
SROs to the Pakistan Customs Tariff to make it more transparent and presentable.
Despite broad-based tariff reduction in one and a half decades, customs duties are still
one of the important sources of tax collection of the federal government. It
contributes 24.4% in the indirect taxes and 15% in total taxes collected by FBR. The
trend of slow down in import in FY: 06-07 has continued in the first half year of FY:
07-08 which has started improving swiftly in all the months of second half year. This
acceleration in imports in the last two quarters of FY: 07-08 has not only resulted into
overall growth in import and dutiable imports for FY: 07-08 but also improved the
collection of CD substantially. In fact, around 27% growth in the value of dutiable
import has recorded during FY: 07-08 against projected growth of 3%. The gross and
net collection of customs duties has been Rs. 163.0 billion and Rs. 150.6 billion
respectively during FY: 07-08 reflecting growths of 12.4% and 13.8% respectively.
The difference between growths of the gross collection and net collection is due to a
saving of Rs. 330 million in refund/rebate payments during FY: 07-08. The collection
of customs duties has not only exceeded the previous year’s collection of customs
duties but also surpassed target of Rs. 148 billion for FY: 07-08. The overall vibrant
performance of customs duties is mainly attributable to spiraling prices of POL
products, increased imports of most of the major items like edible oil, machinery,
plastic, cereals, paper & paperboard. The details of comparison of customs duties and
imports are spotlighted in Table 11.
1455 - 14 -
14
Table 11: Quarterly Comparison of Customs Duty Indicators:
FY: 07-08 & FY: 06-07 (Rs. Million)
FY: 07-08 FY: 06-07 Growth FY: 07-08 FY: 06-07 Growth
Value of Imports
Value of Dutiable Imports
Q1 487,666 448,418 8.8 Q1 237,476 243,307 -2.4
Q2 542,316 454,015 19.4 Q2 267,846 255,259 -4.9
Q3 689,168 457,062 50.8 Q3 355,661 240,701 47.8
April 260,575 156,223 66.8 April 128,771 89,595 43.7
May 262,555 166,867 57.3 May 141,373 91,365 54.7
June 270,723 169,551 57.3 June 152,569 90,376 68.8
Q4 793,853 492,641 61.1 Q4 422,713 271,336 55.8
Total 2,513,003 1,852,136 35.7 Total 1,283,696 1,010,603 27.0
Gross Customs Duty Net Customs Duty
Q1 31,579 32,565 -3.0 Q1 28,976 27,890 3.9
Q2 35,863 36,151 -0.8 Q2 32,668 32,853 -0.6
Q3 43,776 34,471 27.0 Q3 40,234 31,917 26.1
April 14,678 11,256 30.4 April 12,938 10,413 24.2
May 15,968 11,945 33.7 May 14,946 11,206 33.4
June 21,134 18,649 13.3 June 20,828 18,020 15.6
Q4 51,779 41,850 23.7 Q4 48,711 39,639 22.9
Total 162,997 145,037 12.4 Total 150,589 132,299 13.8
Although maximum tariff rate has been @25% for the last few years, but tariff
reduction within the slabs has been continuously pursued. It is evident from Table 12
that around 1/4th of the collection of CD has been fetched from application of 10%
tariff rate, other double digit contributions made by the slabs i.e. 20%, 5%, 25% and
specific rates.
Table 12: Slab-wise Share in Gross Customs Duties during 2007-08
Slabs Customs Duty (Rs. illion) Share (%)
10% 41,222 25.3
20% 21,353 13.1
5% 18,585 11.4
Specific 17139 10.5
25% 16,816 10.3
15% 7,367 4.5
60% 7,139 4.4
90% 5,027 3.1
35% 4,190 2.6
50% 3,749 2.3
55% 3,326 2.0
75% 1,720 1.1
80% 1,279 0.8
30% 979 0.6
Other* 13,106 8.1
Total 162,997 100.0
*Includes export Development surcharge, defense, warehouse surcharge etc.
1555 - 15 -
15
Performance of Major Revenue Spinners of Customs: Only 15 major commodity
groups (chapters) contribute 78 % of the each total customs duties and dutiable
imports. It is evident from Table 13 that out of 15, thirteen items groups of items have
exhibited growth in the collection of CD. However, only auto sector and
miscellaneous chemicals have shown decline in collection.
The automobile sector (CH: 87) is the top revenue generation source of customs
duties. The collection of customs duties from this sector has declined by 8.6% due to
reduced dutiable imports by 3.2%. The import of motor cars/jeeps (87.03) is the
major revenue generation source in 2007-08. The government policy to restrict the
import of old and used motor vehicles more than 3 years of age has vastly
discouraged the import of motorcars. The import of number of motorcars/jeeps has
dropped from 26,967 in FY: 06-07 to 17301 in FY: 07-08. This has not only declined
the value of import by 78 % but also recorded a loss of Rs.0.5 billion during FY: 07-
08. Thus, the collection of customs duty from motorcars/jeeps has plummeted from
Rs.7.3 billion in 2006-07 to Rs. 6.9 billion during FY: 07-08. On the other hand, the
numbers of imported CKD kits of motor vehicles have also come down from 196,070
in FY: 06-07 to 147,374 in FY: 07-08 entailing a loss of Rs. 2.3 billion in CD as
compared to PFY. Thus, overall loss of Rs. 2.8 billion has been recorded in the
collection of CD from CKD/CBU motor cars/jeeps.
Petroleum is the second major revenue generation source of customs duties. Most of
the items of POL products have been exempted from CD. Despite 70% duty free
imports of POL products, the collection of POL products has exhibited a robust
growth of 59% in the collection of CD with 69% growth in dutiable imports. The
collection from POL products has increased from Rs.15.1 billion in FY: 06-07 to Rs.
24 billion in FY: 07-08. Main factor behind this vibrant performance is the spiraling
prices of petroleum products around the world. In fact, a major chunk of the
collection of POL products is realized from the import of High Speed Diesel (HSD).
The collection of CD from HSD has gone up from Rs. 13.7 billion in FY: 06-07 to
Rs. 23 billion during FY: 07-08 yielding a colossal growth of 67%. Apart from
increased prices, higher quantity of imported HSD by 33% is also responsible for
strong growth in the collection of customs duties FY: 07-08.
Edible oil is the third higher source of custom duties. The value of import of edible oil
(CH: 15) has recorded a massive growth of 90.4% but its collection of CD grew by
9.3%. This gap is understandable as prices of edible oil have gone up significantly
which has resulted into higher growth in value of import of edible oils. Since edible
oils are subjected to specific customs duty rates, therefore, this huge growth in the
value of imports has not helped in boosting the customs’ revenue accordingly. Thus,
the growth in the collection of edible oil has been attained due to growth in the
1655 - 16 -
16
collection of crude palm oil and crude soybean due to increased imported quantities of
these items by 22% and 281% respectively.
Table 13: Sectoral Collection of Customs Duty 2007-08 (Rs Million)
PCT Heads 07-08 06-07 Growth (%) Growth in
Dutiable
Imports
Eff.
Rate
CFY
(%)
Eff. Rate
PFY (%)
1.Vehicles & Parts (87) 25,810 28,245 -8.6 -3.2 34.3 36.3
2.POL Products (27) 24,032 15,128 58.9 69.0 10.1 10.8
3.Edible Oils etc (15) 17,213 15,128 9.3 91.7 15.1 26.5
4.Elect Machinery (85) 13,568 11,138 21.8 14.8 7.9 7.5
5.Mech Machinery (84) 11,634 10,525 10.5 7.6 7.2 7.0
6.Plastics (39) 6,379 5,427 17.5 16.9 8.0 8.0
7.Iron& Steel (72) 6,198 5,365 15.5 6.8 11.6 10.7
8.Cereals(10) 5,021 11 44,787.7 24,971.1 9.6 5.4
9.Paper & P. Board (48) 4,390 3,477 26.2 30.2 20.3 21.0
10.Organic Chem (29) 3,586 1,889 7.1 12.9 7.5 8.0
11.Articles of Iron & Steel (73) 2,438 1,742 29.0 35.1 10.4 10.9
12.Tanning & Dying (32) 2,005 1,581 26.8 25.2 12.6 12.4
13.Coffee, Tea, etc (9) 1,860 1,569 19.7 7.2 11.2 10.0
14.Soap & Detergents (34) 1,720 1,554 31.0 36.1 16.8 17.5
15.Misc Chemical ( 38) 1,714 1,460 -1.6 -10.3 9.1 8.3
Major 15 Items 127,568 106,489 19.8 32.7 11.6 12.9
Other* 35,429 38,549 -8.1 1.4 20.0 21.1
Gross 162,997 145,037 12.4 27.0 12.7 14.4
Refund/Rebate 12,408 12,738 -2.6
Total 150,589 132,299 13.8
The availability of machinery at cheaper rates has been the priority of the government
to boost the industrial sector. Despite zero rating and lower rates for many items,
machinery (electrical and mechanical) is still contributing substantially to the customs
duties. A considerable growth of 21.8% in the collection of CD from electrical
machinery was mainly due to increased collection from telecommunication and
transmission equipments, transformers and generating sets.
The value of dutiable imports of mechanical machinery has manifested a growth of
7.6% while collection grew by 10.5%. This growth has mainly been driven by
improved collection of industrial goods, construction machinery, pumps and engines.
On the other hand, the import of textile machinery has come down by 4.5% resulted
12.3% decline in the collection of CD. Similarly, the collection of plastic has also
recorded a growth of 17.5% against dutiable import of 16.9% which also reflects
1755 - 17 -
17
consistency of collection with its base. Some other groups like iron and steel, paper &
paper board, tanning & dying, tea & coffee have also improved their collection due to
increased dutiable imports. Due to tariff reduction, the collection from organic
chemical has posted a modest growth while miscellaneous chemicals have declined
the collection during FY: 07-08 as compared to PFY. Due to food crisis in the
country, a bulk of cereals has been imported which has contributed a significant
amount of Rs. 5 billion to the national exchequer in the form of customs duties.
Federal Excise Duties (FED): During FY: 07-08 Rs. 92.2 billion has been collected
against Rs. 71.8 billion in the corresponding period last year. The collection is 28.4%
higher than the previous year (Table 14).
Table 14: Overall FED Collection (Rs. Million)
Months/Quarters Collection
Achievement
Absolute Percent
FY: 07-08 FY: 06-07 Abs %
Quarter-1 15,929 13,758 2,171 15.8
Quarter-2 23,024 16,762 6,262 37.4
Quarter-3 22,896 17,201 5,695 33.1
April 8,751 7,019 1,732 24.7
May 9,982 7,314 2,668 36.5
June 11,595 9,750 1,845 18.9
Quarter-3 30,328 24,083 6,245 25.9
Overall 92,177 71,804 20,372 28.4
The quarterly collection trend indicates a healthy growth in the second and third
quarters, whereas same pace of growth could not be continued in the last quarter.
Within fourth quarter the performance during April and May has been excellent with
24.7% and 36.5% growth, but unfortunately in the month of June collection grew only
by 18.9%, which is unusual behavior, showing fewer efforts by the field formations.
It has been noted that the FED collection has again become an important source of
federal tax revenues during last three years. Historically the share of FED in total
federal taxes has been declining since FY: 98-99 till FY: 05-06 from 19.7% to 7.7%
(Graph 2). Nevertheless, due to various budgetary measures like FED on services
including Air Travel, Non Fund Services and levy of 1% SED at domestic and import
stage during last two years, the FED share has jumped to 9.2% in FY: 07-08. The
FED revenue target for FY: 08-09 is about 22% higher than the realized collection
during FY: 07-08. The budgetary measures for CFY would further enable the FED
base to expand.
1855 - 18 -
18
Graph 2: FED Collection - Historical Trend
19.7%
16.1%
12.5%11.7%
9.7%8.7% 9.0%
7.7% 8.5% 9.2%
98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08
Analysis of Major Commodities of FED
The major sources of FED revenue have been cigarettes, cement, natural gas, POL
products and beverages, however, during last two years services has become a
significant source of collection. The major six items have contributed around 78% of
total FED collection during FY: 07-08 against 92% in the PFY. The decline in share
of major items is attributed to 1% SED both at import and domestic levels during FY:
07-08. The share of 1% SED stood at 8% and 4% at import and domestic stages
respectively.
Among major items, cigarette was the top most revenue generator with around 31%
share in FED collection, followed by cement (16.4%), services (13.5%), beverages
(7.8%), natural gas (6.6%) and POL products (3%). In absolute terms Rs. 72 billion
were collected from major six items (Table 15).
Table 15: FED Collection from Major Commodities FY: 07-08 and FY: 06-07 (Rs. Million)
Commodities FY 07-8 FY 06-07 Difference
Absolute Percent
Cigarettes 28,519 28,405 114 0.4
Cement 15,094 15,182 -88 -0.6
Natural Gas 6,067 6,328 -261 -4.1
POL Products 2,776 4,783 -2,007 -42.0
Beverages 7,166 7,246 -80 -1.1
Services 12,418 4,414 8,005 181.3
Sub Total 72,040 66,358 5,683 8.6
Share (%) in Total 78.2 92.4
Other (Dom.+Imp) 20,137 5,447 14,690 269.7
Total 92,177 71,805 20,372 28.4
1955 - 19 -
19
The data reveals an unimpressive growth from major items except for services. As
already mentioned the reason for nominal or negative growth was one month lag in
FED collection. However, a 42% negative growth in POL products is due to its
shrinking base. On the other hand a robust growth of over 181% in the head of
services confirms a buoyant base for FED revenues.
Graph 3: A Comparison of Share of Major Commodities
30.9%
16.4%
6.6% 3.0%7.8%
13.5%
39.6%
21.1%
8.8%
6.7%
10.1%6.1%
Cigarettes Cement Natural Gas P O L
Products
Beverages Services
FY 07-8 FY 06-07
FED Collection from Services
The major items include International Air Travel, Non-fund services, Insurance and
Franchise. The overall collection from services stood at Rs. 12.4 billion in FY: 07-08
against Rs. 4.4 billion during PFY. Major chunk of revenue comes from Air Travel
which contributed about 74%, the second major contribution is made by non-fund
services with around 11% share in services (Table 16).
2055 - 20 -
20
Table 16: Collection from Services (Rs. Million)
Items/Quarters FY: 07-8 FY: 06-07 Difference
Absolute Percent
Non-Fund Services
Q1 261 101 160 158.5
Q2 342 170 172 101.2
Q3 368 191 177 93.0
Q4 364 145 219 151.6
Total 1,334 606 728 120.2
I A T
Q1 1,004 189 815 431.3
Q2 2,458 702 1,756 250.1
Q3 2,513 573 1,940 338.5
Q4 3,156 351 2,804 798.1
Total 9,131 1,816 7,315 402.9
Franchise
Q1 51 19 32 168.4
Q2 69 34 35 102.3
Q3 56 39 17 44.1
Q4 105 533 -427 -80.2
Total 282 625 -343 -54.9
Insurance
Q1 486 383 103 27.0
Q2 430 341 89 26.2
Q3 403 424 -21 -5.0
Q4 352 159 193 121.9
Total 1,671 1,306 365 27.9
Overall
Q1 1,803 692 1,111 160.5
Q2 3,299 1,247 2,052 164.6
Q3 3,340 1,287 2,053 159.6
Q4 3,977 1,187 2,789 235.0
Total 12,418 4,413 8,005 181.4
The overall target has been achieved to the extent of 111%, however, nun-fund
services and franchise missed the target by 20% and 64% respectively (Graph 4).
Graph 4: FED Services Target Achievement
During FY: 07-08
80%
127%
34%
111% 111%
Non-Fund
Services
I A T Franchise Insurance Total
2155 - 21 -
21
The shortfall from these two items has been compensated by IAT and Insurance by
collecting 27% and 11% higher revenue than the assigned targets. The meager
revenue from franchise should be the point of concern for the relevant quarters. The
revenue target set for Franchise services was Rs. 833 million for FY: 07-08, whereas
the realized collection was only Rs. 282 million. The collection declined by 55% as
compared to Rs. 625 million collected in the PFY. The second item which missed the
target is the non-fund services provided by the banks. Although the collection
increased by 120% as compared to last year but remained short of target by 20%.
Both weak areas, the franchise and non-fund services, need attention and careful
monitoring for better performance in future.
Special Excise Duty (SED)
One percent Special Excise Duty was levied in the budget for FY: 07-08 both at
import and domestic stages. The overall revenue target for 1% SED was set at Rs. 12
billion with bifurcation of Rs. 6 billion each at domestic and import stage. The
performance during the first year has been mixed. At the import stage target was
achieved to the extent of 115.4%, whereas at the domestic level the performance has
not been satisfactory (Table 17).
Table 17: Collection from 1 % SED (Rs. Million)
1% SED Domestic Target Collection Achievement
(%)
Q1 1,290 516 40.0
Q2 1,420 799 56.3
Q3 1,460 823 56.4
Q4 1,830 1,848 101.0
Total 6,000 3,986 66.4
1% SED Imports
Q1 1,500 833 55.6
Q2 1,500 2,001 133.4
Q3 1,500 1,985 132.3
Q4 1,500 2,102 140.1
Total 6,000 6,922 115.4
Overall 1% 12,000 10,907.8 90.9
During first three quarters overall SED performance was not as per expectations,
however, collection improved in the 4th quarter significantly and target for the
respective quarter was achieved by 101%.
Projections for FY: 2008-09
Foreseeing that the economy will maintain the targeted growth and major taxes will
also continue to display buoyant stance, the budgetary target for FY: 08-09 has been
set at Rs. 1,250 billion, requiring an increase of 24.1 % over the provisional collection
2255 - 22 -
22
of Rs. 1007.2 billion of FY: 07-08 (Table 18). Furthermore, the projections for FY:
08-09 also include the impact of budgetary and relief measures announced at the time
of Federal Budget.
Table 18: A Comparison of Baseline
Collection and Projections
Provisional
Collection FY:
07-08
Projections
FY: 08-09
Addition (Rs.
Billion) Growth (%)
Direct Taxes 387.5 499.0 111.5 28.8
Sales Tax 376.9 470.0 93.1 24.7
Federal Excise 92.2 112.0 19.8 21.5
Customs Duties 150.6 169.0 18.3 12.2
All Taxes 1,007.2 1,250.0 242.8 24.1
The projections for FY: 08-09 will result into following tax mix of individual taxes:
DT (39.9%), GST (37.7%), FED (9.0%), and CD (13.5%).
2355 - 23 -
23
II
Impact Evaluation: An Ex Post Analysis of Budgetary
Measures of FY: 07-082
Introduction
Traditionally, every year, budgetary measures are announced at the time of budget.
These measures are undertaken for various reasons. Firstly, tax-GDP ratio in
Pakistan is considerably low, generation of additional revenues by expanding the tax
base through withdrawing exemptions is quite important. Secondly, distortion in the
tax system requires elimination. Thirdly, measures are required for rationalization of
tax rates. Fourthly, it is used as a tool for encouraging investment by bringing down
the cost of doing business. Fifthly, it is important to help in growing particular
industry through preferential treatment. Sixthly, attention is also paid to the protection
of consumers and providing relief to the low income strata of the society. Seventhly,
taxpayers’ facilitation and simplification of procedures are also major reasons for
introduction of budgetary measures.
In the Budget 2007-08, budgetary measures were aimed to further support the
government in bringing down the cost of business in the country to boost investment.
The main thrust of budgetary measures in the Budget 2007-08 was on generating
additional tax revenues, rationalization of tax rates, bringing uniformity of tax laws
with the international community, departure from adhocism and extension of base.
The prime aim of the article is to undertake an ex post analysis of the budgetary
measures announced in the Budget 2007-08 in the light of ex ante projections. The ex-
post analysis of tax-wise budgetary measures is expected to be helpful in evaluating
the accuracy of the estimates of the measures and their impact on national exchequer.
Tax-Wise Ex-Post Analysis of Budgetary Measures 2007-08
Tax-wise analyses of some of the important measures have been carried out and
presented in the followings.
Direct Taxes
Withholding Tax on Purchase of Locally Manufactured Cars: The importers of cars
are subject to withholding tax@5%. An adjustable withholding tax @2.5% of the
value has been levied in the Budget 2007-08 which is collected by a manufacturer or
authorized dealer at the time of sale, irrespective of the date of booking or advance
2 Author: Mir Ahmad Khan, Second Secretary (FR&S), FBR
2455 - 24 -
24
payment made by the purchaser. The idea of the measure was to bring potential
taxpayers in the tax net and to bring the local manufacturers at par to some extent with
the importers of cars. A sum of Rs.3 billion was projected to be realized at the time of
Budget 2007-08. Due to this measure, an additional collection of Rs. 817 million has
been realized during FY: 07-08.
Unification of Withholding Tax Rate on Export: The income from export had been
under the presumptive regime with different four rates i.e. 0.75%, 1%, 1.25% and
1.5% for various categories. In order to bring uniformity and eliminate discrimination,
a single rate of 1% has been levied for all kinds of export in the Budget 2007-08. The
collection from export has gone up from Rs. 10.9 billion in FY: 06-07 to Rs.11.5
billion FY: 07-08. An additional collection of Rs. 2 billion was estimated at the time
of Budget against Rs. 0.6 billion actually realized during FY: 07-08.
Rationalization of Taxation of Retailers: During FY: 06-07, retailers were subject to
pay @0.75% with turn over upto Rs. 5 million and 2% for exceeding turn over Rs. 5
million. In the Budget 2007-08, these rates were revised. The new rates have been
highlighted in Table 1.
Table 1: Rates of Income Tax for Retailers During FY: 07-08
Turn Over Tax Rate
Upto Rs. 5 million 0.50%
Exceeding Rs. 5 million but does not
exceed Rs.10 million
Rs. 25,000 plus 0.5% of the amount of
turnover exceeding Rs. 5 million
Exceeding Rs.10 million Rs. 50,000 plus 0.75% of the amount of
turnover exceeding Rs. 10 million
Due to this measure, the collection from retailers has reduced significantly i.e. Rs. 223
million in FY: 06-07 to Rs. 52 million in FY: 07-08.
Extension of Income Tax to CNG Stations: All the gas marketing companies have
been obliged to collect a tax @4% of the gas bills. The tax collected in this regard is
final tax on the income of CNG stations operators from sales of gas. An additional
sum of Rs. 604 million has been collected against target of Rs. 700 million during FY:
07-08.
Sales Tax and Federal Excise
Extension of scope of excise duty on financial Services: A number of financial services
were brought into the fold of FED during Budget 2006-07. However, their collection
during FY: 06-07 was extremely lower than projection. The additional collection from
financial services was estimated at one billon rupees at the time of budget. There was a
need to augment the scope of FED on financial services; therefore, all non-fund
2555 - 25 -
25
services have been brought into the net except cheque book issuance charges, Umra
and Hajj service charges, cheque return charges and utility collection charges. The
collection from financial services has increased from Rs. 606 million in FY: 06-07 to
Rs. 1,334 million in FY: 07-08 reflecting a growth of Rs. 729 million.
Upward Revision of Retail Price of Cigarettes by 7%: It has been a regular feature
that retail prices of cigarettes are revised upward. It is now well established that the
upward revision of prices of cigarettes have been encouraged by Framework
Convention on Tobacco Control (FCTC).
The retail price of cigarettes is directly related to federal excise duty. In the Budget
2007-08, the retail price of cigarettes has been revised upward by 7%. Similarly,
upward adjustment was necessary due to increased prices of cigarettes. The details of
increase in the retail price of cigarettes are spotlighted in Table 2.
Table 2: Upward Adjustment of FED Due to Increase in Retail Price of Cigarettes
Slabs Threshold FY: 07-08 Threshold FY:
06-07
Upper 63% of Retail Price 63% of the
Retail Price
Medium Rs. 2.80 per 10 cigarettes
plus 69% incremental
rupee or part thereof
Rs. 2.63 per 10
cigarettes plus
69%
incremental
rupee or part
thereof
Lower Rs. 2.80 per ten
cigarettes
Rs. 2.63 per ten
cigarettes
The upward revision of retail price of cigarettes has marginally increased the
collection of Rs. 28.3 billion in FY: 06-07 to Rs. 28.5 billion in FY: 07-08. This
fractional improvement is significant when viewed in the context of nil collection
from cigarettes in July 2007 due to alignment of date of submission of FED returns
with the sales tax returns. In fact, the collection from cigarettes during July, 2006 was
around one billion rupees. It implies that adjusted collection for FY: 07-08 would be
Rs. 29.5 billion which is one billion rupees higher than previous year against the
projection of Rs. 4.5 billion in the Budget 2007-08. On the other hand, production of
cigarettes has grown by around 7%. If we assume 7% natural growth in collection of
PFY, the collection of cigarettes comes to Rs. 30.3 billion. It means that a loss of Rs.
0.8 billion is estimated after natural growth adjustment and July 2007 factor. On the
other hand, the collection of sales tax due to increased prices has increased swiftly
from Rs. 6.9 billion in FY: 06-07 to Rs. 7.9 billion in FY: 07-08 yielding a growth
of 13%.
2655 - 26 -
26
Levying of One Percent Special Excise Duty: In order to generate additional revenues,
special excise duty@1% was levied at domestic and import stage vide SROs
655(I)/2007. However, already zero rated commodities, food products and many other
items of sensitive nature were exempted from special excise duty. These include
vegetables, seeds, fruits, edible oil & fats, natural gas & LPG, some petroleum
products including crude oil, fertilizer, pharmaceuticals goods produced or
manufactured and exported by manufacturers etc. A sum of Rs. 10.9 billion has been
collected as special excise duty (Rs. 6.9 from imports and Rs. 4 billion from
domestic). The target of Rs. 12 billion has been missed by Rs. 1.1 billion mainly due
to lesser collection from domestic.
Higher Sales Tax Rates On Specified Raw Materials: In order to increase the
incidence of tax on un organized sector and to improve the tax compliance by small
and medium manufacturers, higher sales tax @20% and 17.5% have been levied in
the Budget 2007-08. The organized sector can adjust it’s sales tax against final
liabilities while un-organized sector was expected to become compliant to claim input
adjustment. The sectors attracted higher rates were iron & steel, plastics, paper &
paperboard, chemicals etc. A huge sum of Rs. 9.2 billion was expected to come from
this measure during 2007-08. Higher rates have paid the dividends as combined target
of Rs. 9.1 billion has been surpassed Details of the collection is presented in Table 3.
Table 3: Collection from Higher Rates of Sales Tax (Rs Million)
Sales Tax Rates 2007-08 2006-07 Increase
(Absolute)
Increase (%)
20% 1,390 921 469 51
17.5% 8,245 6,456 1,789 27
Total 9,634 7,377 2,257 31
Abolition of FED on Motor Gasoline and Jet Fuel: Before the Budget 2006-07, motor
gasoline and jet fuels were subject to FED@88 paisa and 6 paisas respectively. In
order to lower the prices and to provide relief to the general public, FED on motor
gasoline and jet fuel in the Budget 2007-08 has been abolished. An amount of Rs. 600
million was estimated to forgo due this measures during 2007-08. But actual loss has
been Rs. 690 million during 2007-08. It means that loss has been higher by Rs. 90
million against target.
Abolition of FED on Petroleum Bitumen: Due to increased usage with the passage of
time, domestic production was not enough to fulfill the requirement of petroleum
bitumen. On the other hand, it was subjected to higher rate of 25% in customs duty
besides 15% sales tax on import. In order to ensure availability of bitumen and
barring smuggling, FED on bitumen was abolished in Budget 2007-08. A loss of
2755 - 27 -
27
Rs.109 million was recorded in the collection against projected loss of Rs. 130 million
for 2007-08.
Taxation of International Air Travel: FED was chargeable on international air travel
through destination specific fixed rates with exemption for passengers coming from
abroad to Pakistan. However, exemption was enjoyed by the incoming passenger into
the country. This one sided levy was a discrimination. Besides, there were levies on
international travel like foreign travel tax and government airport tax. During the
Budget 2007-08, it was decided to club all the taxes on international travel into a
single federal excise duty called Air Travel Tax (ATT) for all incoming and outgoing
passengers. It was projected that this measure will realize an additional robust amount
of Rs.6 billion during 2007-08. This target has been exceeded by Rs.3.1 billion as far
as FBR tax collection is concerned. If we take into account collection realized by
other departments in the previous year, then only Rs. 2.6 billion has been an
additional collection during 2007-08. By comparing FBR collection from
international travel of Rs. 1.8 billion previous years, the collection of Rs. 9.1 billion
from ATT during 2007-08 has been exceptionally higher by Rs. 7.3 billion(Table 4).
Table 4: Collection of Airport Travel Tax
(Rs Million)
Note: FTT & GAT were not collected by FBR
Customs Duties
Tariff rationalization has been a regular feature in almost all the budgets presented
every year. During Budget 2007-08. Main thrust of budgetary measures has been on
tariff restructuring for auto sector and reduction of customs duty rates for raw
material to bring down the cost of business in the country and boost the industrial
sector. The analysis of some of the measures related to customs duties is highlighted
in the following:
Revision of Tariff Structure of Automotive Sector: The automobile sector is the top
revenue generation source of customs duties. Any change in the policy regarding tariff
or age restriction seriously affects the collection of customs duty.
The import of automotive vehicles was subject to customs duty, sales tax, withholding
tax and CVT during FY: 06-07. There were different slabs for customs and CVT.
Since CVT was levied at only import stage which was objectionable according to
Taxes FY: 07-08 FY: 06-07 Difference
International Travel - 1,816 -
Foreign Travel Tax (FTT) - 3,713 -
General Airport Taxes
(GAT)
- 1,000* -
Airport Travel Tax (ATT) 9,131 6,529 2,602
2855 - 28 -
28
WTO. In order to eliminate discrimination, CVT was abolished in FY: 07-08 and
customs duty was increased to compensate for revenue loss due to abolition of CVT.
The details of structure of CD rates for auto sector announced during FY: 07-08 is
depicted in Table 5.
Table 5: Tariff Structure for Motor Vehicles During 2007-08
Category CD Rates (%)
2006-07
CD Rates (%)
2007-08
Upto 800 CC 50 50
801-1000 CC 50 55
1001-1300 CC 50 60
1301-1500 CC 50 60
1501-1600 CC 65 75
1601-1800 CC 65 75
Above 1800CC 75 90
Moreover, the government had announced to restrict the import of the old and used
automotive vehicles of age to 3 years during FY: 07-08. The import of number of
motor/cars which is the main source of customs duty from auto sector has dropped
substantially. Thus, the collection of customs duty has also declined. Detail of number
of cars/jeeps, import value and customs is presented in Table 6.
Table 6: Import of CBU Motor Cars/Jeeps During: FY: 07-08 & FY: 06-07 (Value and CD in Rs. Million, Quantity in Nos)
2007-08 2006-07 Variation
Qnty Value CD Qnty Value CD Qnty CD
TOR 266 97 88 6,842 1,969 1,128 -6,576 -1040
PB 13,981 6,089 4,624 16,554 6,163 3,910 -2,573 714
GS 17 21 18 87 67 148 -70 -130
Other 3,037 2,913 2,134 3,484 3,456 2,126 -447 8
Total 17,301 9,120 6,864 26,967 11,655 7,312 -9,666 -448
On the other hand, the tariff rate for motorcycles in CBU condition has also been
reduced from 90 % to 80% in the Budget 2007-08.Moreover, CD rate for CKD has
also slashed from 30% to 15%. The overall projected loss from all these measures of
auto sector was Rs. 1.3 billion. But actual loss estimated at the end of FY: 07-08 has
been Rs. 2.3 billion reflected in Table 7.
2955 - 29 -
29
Table 7: Loss in the Collection Due to Tariff and Non Tariff Initiatives in Auto Sector During 07-08 (Rs. Million)
Reduction of CD From 25% to 15% on Petroleum Bitumen/Asphalt: In order to
ensure the availability of these items, the customs duty rates were reduced from 25%
to 15% on petroleum bitumen and asphalt. Due to this measure, import value has gone
up significantly during FY: 07-08. Despite rate reduction, the collection from these
items has improved by Rs.14 million due to increased imports during FY: 07-08
against target of Rs.30 million.
Conclusion
The government requires additional revenues for development and prosperity of the
country. Some of the measures undertaken in budget 2007-08 have been quite
effective in terms of revenue generation. Most of the measures of revenue
enhancement during Budget 2007-08 were from federal excise and sales tax.
The FBR has diverted its attention toward services that sizable contribution is
required to be realized from this source, being the largest sector in the economy of
Pakistan. In this regard, the scope of FED has been extended to the services in a
couple of years. The introduction of international travel tax during Budget 2007-08
has vastly added to the collection of FED, resultantly, services sector has now become
the 3rd major revenue spinner of FED. Similarly, the levying of special excise duty in
FY: 07-08 has also contributed a huge sum of the FED collection. Higher rate of sales
tax has also fetched robust amount of additional tax collection.
The merger of CVT in customs duties on vehicles has not compensated for the loss of
collection in CVT. Moreover, the government initiative to restrict the import of
vehicles for more than 3 years age has reduced the number of motor vehicles
significantly which has also affected the collection of customs duty as well. As a
whole, budgetary measures remained fruitful in term of revenue generation.
Category Loss in Collection of Taxes
Abolition of CVT 1,794
CD Rate Restructuring & Capping 3
years
448
CD Rate Reduction for Motor Cycle 120
Total Loss 2,362
3055 - 30 -
30
III
An Overview of Tax Administration
Reforms in FBR3
Background
The goal of tax administration is to keep pace with the economy and generate
sufficient resources for the smooth functioning of the economy. Macroeconomic
imbalances like, trade and budget deficit can be effectively tackled through an
efficient, equitable and transparent tax system prevalent in the country. Secondly,
flow of investment particularly foreign direct investment is linked with tax policy and
tax administration persuasion. The stakeholders are not only concerned with effective
and marginal taxation between various sectors of the economy, but also how the
taxation policy is administered. A revenue administration that is perceived to be
arbitrary or predatory discourages investment. Similarly, the efficiency of the
Customs administration in clearing cargo figures prominently in investment decision,
especially of multinational companies. Thirdly, corrupt and inefficient tax
administration system encourages tax evasion and avoidance as the delinquency goes
unpunished. This also discourages the honest taxpayers to honor their tax obligations.
Finally, an efficient tax administration working on modern lines is necessary to deal
with large taxpayers who have access to professionally sound intermediaries. In this
scenario, tax departments relying on manual business processes and complicated and
cumbersome procedures have little capacity to mobilize resources by competing with
knowledgeable stakeholders.
Pre-Reform Position and Stakeholders’ Perception
Until recently, the tax machinery in Pakistan was regarded as inefficient and
untrustworthy. The general perception about the department was highly adverse,
especially on matters of governance. This situation was further complicated by
inadequate resource mobilization, failure to meet revenue targets, disappointingly low
tax effort as reflected by Tax/GDP ratio, and low level of voluntary compliance. Even
though the anecdotal evidence was quite clear, but CBR (now FBR) decided to have
stakeholders’ feedback through a perception survey in 1999 to serve as benchmark.
The results of this exercise confirmed the prevalent apprehensions. The respondents
reconfirmed that the laws were complicated, rules and regulations stringent, tax
machinery was found inefficient that failed to understand and respond to the dynamics
of fiscal and commercial environment. It further revealed that the CBR and its allied
departments were not fair in their professional dealings. Consequently, the
organization was ranked very high on the corruption index by the respondents.
3 This Article has been prepared by Umar Wahid Secretary (Fiscal Research & Statistics) FBR. The
information has been obtained from the respective wings of FBR and their cooperation is highly
appreciated.
3155 - 31 -
31
The detailed perception gathering initiative was completed in 2000 under the Shahid
Hussain Committee Tax Reform project. The results of this survey were not too
different than the earlier report. While elaborating on the reasons for this malaise, the
present study indicated that below-subsistence level of wages, absence of proper
career management policy, and the lack of job protection for employees as leading
HR-related factors. Similarly, lack of adequate infrastructure and manual handling of
business processes were also inhibiting smooth tax administration. Thus, to ensure
transparency in the working of FBR, generate potential revenues, transform the
environment from complete coercion to facilitation, and to minimize the adversarial
relationship between the tax collector and taxpayers, it was necessary to undertake
wide-ranging tax policy and administrative reforms.
Tax Administration Reform Program (TARP) initiatives in a chronological order:
May 2001: Syed Shahid Hussain’s Committee Report
Aug 2001: IMF Mission Report
Nov 2001: The Strategy Document on Tax Reform
Nov 2001: Presentation to the President of Pakistan
Dec 2001: Approval of the Strategy Document
Feb 2002: Establishment of Supervisory Council
Mar 2002: Ground Work for TARP & Pilot Projects under Bridge
Financing/ PSCB Project
April 2005: TARP Initiated
The major thrust of the TARP can be summarized in the following three-prong
strategy:
a) Re-organization of Headquarter and Field Formations on functional lines;
ensuring separate streams for internal and internal taxes; and offering special
treatment to large taxpayers;
b) Attaining the objectives of reforms initiatives through a completely automated
setup for the four federal taxes; and
c) Stronger emphasis on human resource management through complete
workforce analysis, training needs, and induction, promotion and
remuneration strategies.
The broad objectives of the Tax Administration Reform Project (TARP) were as
3255 - 32 -
32
follows:
1. Undertake extensive Business Process Re-engineering, simplify procedures
and reap the benefits of efficiency gains
2. Facilitate and promote voluntary compliance;
3. Increase overall revenue collection and contribute to the achievement of fiscal
targets;
4. Increase in tax to GDP ratio;
5. Guarantee fairer and more equitable application of tax laws; Increase in
transparency and integrity;
6. Broaden the tax base;
7. Improve effectiveness, responsiveness and efficiency;
8. Provide transparent and high quality tax services; and
9. Strengthen audit and enforcement procedures.
The funding for the Project came from the World Bank, DFID, and Government of
Pakistan. The details of the funding by projects-heads are as follows.
S.
No
Description of
TARP Heads
Total
Budget (Rs.
Million)
Share
(%)
GOP
Component
(Rs. Million)
Share
(%)
World
Bank/ DFID
Component
(Rs.
Million)
Share
(%)
1 Technical Assistance 938.9 9.9 112.7 4.9 826.3 11.5
2 Customized Software 3,177.6 33.4 381.3 16.5 2,796.3 38.9
3 Hardware and Allied
Equipment 2,059.2 21.7 411.8 17.8 1,647.3 22.9
4 Infrastructure
Development 1,406.0 14.8 351.5 15.2 1,054.5 14.7
5 Automobiles 175.5 1.8 35.1 1.5 140.4 2.0
6 Training 585.2 6.2 - 585.2 8.1
7 Program Management 178.9 1.9 35.8 1.6 143.1 2.0
8 Sub-Total 8,521.2 89.7 1,328.2 57.6 7,193.0 100.0
9 Cost Escalation 979.4 10.3 979.4 42.4 0 0.0
10 Total 9,500.6 100.0 2,307.58 100.0 7,193.0 100.0
Source TP&R wing FBR
At the start of the Project, Vision, Mission and Value statements were developed and
adopted by the revenue organisation and a strategy document for reform was
prepared. To ensure timely completion of reform initiatives, a Project Implementation
Plan (PIP) was also prepared. Finally to ensure proper monitoring of the project, a
comprehensive list of performance indicators was prepared and enforced.
3355 - 33 -
33
VISION
To be a modern, progressive, effective,
autonomous and credible organization for
optimizing revenue by providing quality
service and promoting compliance with tax
and related laws
MISSION
Enhance the capability of the tax system to
collect due taxes through application of
modern techniques, providing taxpayer
assistance and by creating a motivated,
satisfied, dedicated and professional
workforce.
VALUES
These include: Integrity, Professionalism,
Teamwork, Courtesy, Fairness,
Transparency, and Responsiveness.
Broad Contours of Tax Administration Reforms
The major areas of reform under Tax Administration Reform Program (TARP) were:
infrastructure development, automation of business processes, human resource
development, and revamping of the audit, enforcement, appeals and dispute resolution
mechanism, and introduction of modern concepts on taxpayers’ education and
facilitation. Within each of these major initiatives, extensive interventions have been
developed and introduced at the micro level.
Human Resources Development: The level of training and skill of the personnel was
not considered up to the required standards for working on professional lines. To
introduce professionalism and acquaint FBR staff with the modern management
techniques, a comprehensive program of training and capacity building was
envisioned. The focus of the HRM strategy is on capacity building of employees, up-
gradation of the working environment through provision of better facilities, and
improved induction, promotion and remuneration packages.
Audit: Audit has taken a key position in the working of FBR after the introduction of
self-assessment scheme. The effective audit can result in the reduction of tax evasion
3455 - 34 -
34
and is helpful in increasing compliance. Due to audit, non-filing of return can also be
checked. Some of the initiatives are:
Establishment of specialized internal audit functions in FBR;
Setting up of an internal audit office for planning, program direction, procedures,
training and evaluation of the internal audit program throughout the FBR
Annual Audit Plans for Direct and Sales Taxes which cover available resources
and projected case audits at the various jurisdictions;
Programs and procedures for detection of potential fraud/evasion for referral to
the Customs & Tax Fraud function; and
Post Clearance Audit in Customs.
Information Technology/Automation
The usage and efficient management of information technology were the main
challenges to reform tax administrations. The usage of IT in FBR and its allied
departments was adhoc based and lacked co-ordination. There was duplication of data
entry across different departments, the benefits of IT have not been achieved as
computerization has been used to automate or partially automate manual processes
rather than to re-engineer the processes; and information was frequently collected
under the auspices of a single circle or Collectorate, which then considers it to be the
owner of the data.
In order to move from a highly manual to an automated organization in which
computers are used to carry out decisions made by various functional and technical
teams/ authorities and ensuring availability of all the information at all strategic points
within the organization, following goals have been setup to:
Improve the data management control as per best international practice being
carried out in the industrialized countries
Automate entire business process across taxes
Increase transparency of the tax administration;
Reduce interface between the taxpayers and tax administration in day-to-
operation;
Managing Information in a manner to enhance the tax-net, increase revenue, and
facilitate import and export trade; and,
Identify international best-practices, and getting help adopt these accordingly.
A brief outline of BPR initiatives in the various taxes administered by FBR is given.
BPR in Income Taxes: Income tax administration has undergoing a strategic
organizational shift from a cylindrical to a functional one. Furthermore, its processes
that were traditionally geared towards a dispersed and large number of small offices
3555 - 35 -
35
(731 in total) have been overhauled. The whole range of functions such as
registration, taxpayer education and facilitation, audit, enforcement, HRM, IT,
internal audit and data processing has been separated and fully functional. The core
processes identified in terms of major impact are tax collection, audit selection and
demand enforcement. Extensive use of information technology is the major driving
force in the design of these processors.
BPR in Sales Tax: BPR is intended to fine-tune the existing processes to eliminate
wastages, provide timely and accurate information within and outside the organization
and deliver quality service to taxpayers. In this regard, the redesigned refund process
titled Sales Tax Automated Refund Repository (STARR) is a major milestone. It is an
integrated on-line system. A typical and completely documented refund case is
processed within a few days, which previously used to take weeks. Further
refinements in the form of risk-based management module are in the offing.
Moreover, re-organization process of registration for capturing relevant taxpayer data,
re-design the audit function to significantly enhance audit capability and control have
been completed.
BPR in Customs: Customs processes are characterized by complex and cumbersome
procedures and extensive interaction between taxpayers and tax collectors. This is
causing heavy losses to the importers and manufacturers due to delays in cargo
clearances. A customs re-engineering team has conceived and developed the Customs
Automated Reform Project (CARE) and implemented. This project addresses some of
the key processes including cargo clearance using profiling, selectivity and risk
management, transshipment and auction management. The re-configured cargo
clearance procedures have reduced clearance time from the present 8+ days to few
hours. Similarly automated transshipment procedure would expedite approval at the
port of arrival. Care has been taken to re-engineer the procedures to conform to
international best practices recommended by the World Customs Organization
(WCO) and other international trade conventions/ treaties. This CARE was first
introduced at Karachi and with its successful result it has been replicated in all the
MCCs throughout the country.
Restructuring of FBR headquarters
At the FBR Headquarters level re-structuring has been carried out and at the initial
stage five functional wings were setup namely, FR&S, IMS, HRM, Audit, and FATE.
Professional /trained Members from the open market were hired through a transparent
recruitment policy. Similarly, staff from the existing strength was posted in theses
reform wings through IJP process. The strategy of high pay package introduced for
these reform units was highly successful and rewarding; therefore, the scheme has
been phase wise replicated in other wings of FBR and the field offices.
3655 - 36 -
36
Revenue Operations
The old and primitive field structure in tax collection has equally contributed in the
inefficiency of taxation system. The experiment of establishing LTUs and MTUs has
been a success on the basis of a number of indicators, including revenue collection,
joint audits by income and sales tax teams, enforcement, provision of modern
facilities, and facilitation of the taxpayers. The integration of domestic taxes into 13
RTOs and the establishment of 13 MCCs have further improved the efficiency of the
system. Some of the steps envisioned for future are given below:
Merging of as many support services as possible in the long run for all Revenue
Administrations, including Customs, even though the Customs operations will
always be maintained as a separate wing;
Creating an integrated tax information system, including a taxpayer account for
each taxpayer and a taxpayer accounting system, governed by the unique
taxpayer-identification-number system;
Designing and implementing modern risk-management systems based on
mathematical ratios, taxpayer profiles, and industry standards, etc., to support
compliance-enforcement programs.
Designing vigorous enforcement programs to target taxpayers who choose not to
comply voluntarily; and
Introducing amendments/ additions to the Tax and Customs Laws that will
support and enable the envisioned reforms and transformation.
Enforcement
Enforcement is an important area of reform in view of the weak tax compliance. It is
envisaged that the tax policy and administrative reforms should lead to better
enforcement, as complete tax profiles of target population will be available to the tax
administrators.
Appeals and Dispute Resolution
Often ignored in the past is the area of Appeals and Adjudication. The reform
program projects that the burden of litigation at various appellate fora would be
reduced greatly to reduce elaborate human resource involvement in the entire process,
which incidentally has generated only meager revenues for the government but at the
expense of great hassle for the taxpayers. A complete overhauling of this important
area has been initiated, which are highlighted as follows:
Continuation with Alternate Dispute Resolution (ADR) mechanism
Alignment of tax laws;
3755 - 37 -
37
Training and tenure posting of adjudicating officers with suitable infrastructure
and facilities;
Protection of staff from extraneous influences and investigating agencies;
Countrywide computerization of Adjudication Collectorates; and
On-line access of the adjudicating officers to data on valuation, imports-exports,
local production of goods, information/profiles of taxpayers, case laws, latest
ruling/judgments of superior courts; and computer-generated adjudication orders.
Facilitation and Taxpayer Education
Proper education of taxpayer is essential for efficient enforcement of tax policies and
compliance. The FBR has already taken a number of steps for education and
facilitation like the introduction of help-line, web facility, printed material and
establishment of facilitation center etc. Furthermore, the taxpayers are being
facilitated through media campaigns to improve compliance. Taxpayers are also being
educated on such basic things as: how to fill the returns, revisions in the existing rate
structure, time-to-time changes in rules and procedures etc. FBR is also working on
broadening of tax base and proper registration and maintaining national tax number
(NTN).
Infrastructure Development
The emphasis of the tax administration reform was on promoting voluntary tax
compliance through an enhanced level of taxpayers’ facilitation. Simplification of
rules and procedures, and creating a hassle free tax environment for the taxpayers,
To achieve these objectives FBR has made tiring efforts to develop the dilapidated
infrastructure at the field level and to create a congenial working environment both
for the taxpayer and tad tax administration. The establishment of dedicated tax units
(LTUs and MTUs) at Karachi and Lahore as a pilot test project was a successful
experiment for the FBR, so with the passage of last few years, the scope of taxpayer
facilitation has been extended to the entire country and all the domestic taxes has been
co-located under the 13 RTOs in the major cities of the country. Similarly, the
Customs collectorates have been re-structured and converted into 13 MCCs, besides
setting up large number of Taxpayers Facilitation Units (TFCs) at important places in
the country.
Tax Policy Reforms
In order to attain efficiency and equity in the taxation system, promote investment
opportunities both for domestic and international investors and encourage exports
which was seriously hampered due to high tax and tariff rates, following measures
have been introduced in the taxation system of Pakistan:
3855 - 38 -
38
Tariff Rationalization:
The first step in the tax policy reform initiatives was the initiation of tariff
rationalization in FY: 88-89, when the maximum tariff was reduced from 150% to
125%. Since then, this process continued at an accelerated pace, the maximum rate of
duty has gradually been reduced to 25% in FY: 05-06 and in vogue till to-date.
Introduction of General Sales Tax (GST): The other significant improvement at the
early stages of tax policy reforms was the introduction of General Sales Tax
(GST).The rational behind this initiative was the existence of a combination of tax
rates applicable for sales tax collection like, higher rate of 20% on certain
commodities and also the further tax @ 3% applicable to non-registered persons.
These distortions have been abolished in FY: 04-05 and a uniformed rate of 15% has
been fixed both at import and domestic stages. Similarly the concept of zero-rating
has been introduced for the entire chain of export-oriented industries as a short term
arrangement to improve cash-flow situation of the investors, and to avoid the legacy
cumbersome system of refunds and rebates. Once transparent system of refund/rebate
payments is setup the zero rating concepts will be done away with.
Changes in Income and Corporate Taxes: The income and corporate tax structure has
also gone through substantial changes and improvements in recent years. These
include enhancement in basic threshold of exempt income over the years, change in
the advance tax regime, and continuous reduction in corporate rates to promote
corporate culture. The corporate rates were at their peak in 1993, where Banking
companies were charged @ 66%, Public companies @ 44% and for Private
companies @ 55%. These rates have been gradually reduced and parity of 35%
amongst the companies has been attained in 2007. Another important development in
the income tax structure has been the introduction of the concept of self-assessment.
Outcomes of Reforms
The wide-ranging tax and tariff reforms, as well as reforms in tax administration, have
been beneficial. The resource mobilization efforts of FBR have been impressive.
During the reform period 2001-08 FBR has collected additional revenue of Rs. 603
billion for the government, particularly, the FY: 07-08, has generated alone an
additional amount of Rs. 160 billion and a high growth of 18.9% has been achieved
over FY: 06-07. Resultantly, FBR has been able to maintain 0.3% increase per annum
in the Tax/GDP till FY: 06-07. This ratio has declined by one percentage point during
FY: 07-08 due to occurrence of unfavorable events which has badly affected the
economy, resultantly FBR has also faced revenue shortages to the tune of Rs. 18
billion against the original target. However, it is expected that FBR will meet the
revenue target of Rs. 1250 billion fixed for FY: 08-09, as a result the Tax/GDP ratio is
expected to reach 10%, which will be consistent with the ten-year revenue vision of
3955 - 39 -
39
the Organization.
On the broadening of tax base front, one of the objectives of tax policy and
administration reforms was broadening of tax base. This objective has been achieved
when the return filers that were only 1 million in FY: 03-04, has increased to 1.23
million in FY: 04-05, and further jumped to 1.49 million in FY: 05-06. The number of
filers has reached 1.81 million in FY: 06-07 and 2.1 million in FY: 07-08. The growth
has been around 40% over FY: 05-06.
Similarly, the number of registered persons with sales tax department has increased
from 101,851 in FY: 03-04 to 115,702 in FY: 04-05. It has further enhanced to
116,686 in FY: 05- 06. During FY: 06-07and 07-08 the registered persons has reached
to 128,210 and 145,000 respectively indicating a growth of 13.1%
Effective resolution of pending appeals both of direct and indirect taxes has been a
land marked achievement of the Government during the last three years. Excluding
cases filed at Supreme and High Courts and Appellate forums, 78,000 cases were
pending in July 1, 2004. All these pending appeals have been disposed of during FY:
two years. The FY: 05-06 started with a new dispute resolution strategy, deciding all
new appeals and adjudication cases within 90 days of their filing as per law. This
policy has been actively perused to provide relief to the taxpayers. All the appeals and
adjudication cases filed in FY: 05-06, FY: 06-07 and FY: 07-08 have been decided.
Simultaneously, hectic efforts have also been made for quick disposal of cases at the
higher legal fora. There were about 1950 cases, pending with Apex court, out of
which about 1600 cases, some of these were over a decade old, were decided by the
Apex Court. Similarly, in high courts about 13000 cases were awaiting decisions.
With FBR best efforts, about 9000 cases have been decided by the High Courts.
All this efforts have considerably reduced the litigation burden on taxpayers. As a
result, not only the cost of doing business has reduced, a hassle- free environment has
also been created.
Future Strategy
FBR main focus in now on the following three major areas of reform in the near
future:
Training and Development: The important goal of FBR is to ensure that existing staff
receive training in the new systems and procedures and also training of existing staff
must be combined with effective recruitment systems to ensure that the right
candidates are selected to fill any vacancies, which arise. Similarly, FBR managers
will need to be trained in the management skills, which will enable them to manage
their assignments more effectively. For this purpose the training strategy will include
allocation of proper workloads, the setting of appropriate performance targets, and
4055 - 40 -
40
monitoring or tutoring their staff to ensure that they meet their targets need to be
added in
Full automation: The vision of FBR provides for a functionally integrated tax
administration. The integration will provide taxpayers with a single point of access,
enabling them to easily obtain all the information required to assess their tax
liabilities. Moreover, streamlined training and capacity building will allow the FBR to
deploy staff in a more flexible manner. Currently, the BPR of the individual taxes has
been successfully in operation, but ITMS is the ultimate goal of FBR to bring the
organization as per best international practice
Workforce Rationalization: Once the FBR is fully automated and manned by trained
and professional manpower, the second stage of human resource policy would be staff
rationalization. For this purpose a workforce rationalization strategy will be devised in
consultation with the establishment Division and align with the government labour
policy.
4155 - 41 -
41
STATISTICAL APPENDIX
Comparative Statements of
Month-to-Month and Progressive
Collection of
Federal Taxes 2007 – 08
4255 - 42 -
42
ALL TAXES
TWO YEAR COMPARATIVE - MONTH TO MONTH & PROGRESSIVE COLLECTION
Rs. Million
MONTHS FY 2007-08 FY 2006-07 COMPARISON COMPARISON AS %
AGE
GROSS Reb /
Ref NET GROSS
Reb /
Ref NET GROSS Reb / Ref NET GROSS
Reb /
Ref NET
1 2 3 4 5 6 7 8 9 10 11 12 13
JULY M 55,869 4,928 50,941 54,468 8,290 46,178 1,401 -3,362 4,763 2.6 -40.6 10.3
AUGUST M 63,040 2,901 60,139 54,016 7,683 46,333 9,024 -4,782 13,806 16.7 -62.2 29.8
P 118,909 7,829 111,080 108,484 15,973 92,511 10,425 -8,144 18,569 9.6 -51.0 20.1
SEPTEMBER M 100,662 6,606 94,056 101,547 10,121 91,426 -885 -3,515 2,630 -0.9 -34.7 2.9
1st Quarter 219,571 14,435 205,136 210,031 26,094 183,937 9,540 -11,659 21,199 4.5 -44.7 11.5
OCTOBER M 69,798 3,410 66,388 60,399 7,087 53,312 9,399 -3,677 13,076 15.6 -51.9 24.5
P 289,369 17,845 271,524 270,430 33,181 237,249 18,939 -15,336 34,275 7.0 -46.2 14.4
NOVEMBER M 73,412 4,869 68,543 67,079 8,052 59,027 6,333 -3,183 9,516 9.4 -39.5 16.1
P 362,781 22,714 340,067 337,509 41,233 296,276 25,272 -18,519 43,791 7.5 -44.9 14.8
DECEMBER M 106,630 11,621 95,009 123,862 9,626 114,236 -17,232 1,995 -19,227 -13.9 20.7 -16.8
2nd Quarter 249,840 19,900 229,940 251,340 24,765 226,575 -1,500 -4,865 3,365 -0.6 -19.6 1.5
Upto 2nd Qtr 469,411 34,335 435,076 461,371 50,859 410,512 8,040 -16,524 24,564 1.7 -32.5 6.0
JANUARY M 85,205 7,664 77,541 55,594 3,434 52,160 29,611 4,230 25,381 53.3 123.2 48.7
P 554,616 41,999 512,617 516,965 54,293 462,672 37,651 -12,294 49,945 7.3 -22.6 10.8
FEBRUARY M 75,866 3,100 72,766 56,830 4,404 52,426 19,036 -1,304 20,340 33.5 -29.6 38.8
P 630,482 45,099 585,383 573,795 58,697 515,098 56,687 -13,598 70,285 9.9 -23.2 13.6
MARCH M 99,973 5,428 94,545 89,298 7,399 81,899 10,675 -1,971 12,646 12.0 -26.6 15.4
3rd Quarter 261,044 16,192 244,852 201,722 15,237 186,485 59,322 955 58,367 29.4 6.3 31.3
Upto 3rd Qtr 730,455 50,527 679,928 663,093 66,096 596,997 67,362 -15,569 82,931 10.2 -23.6 13.9
APRIL M 88,982 5,319 83,663 66,406 6,921 59,485 22,576 -1,602 24,178 34.0 -23.1 40.6
P 819,437 55,846 763,591 729,499 73,017 656,482 89,938 -17,171 107,109 12.3 -23.5 16.3
MAY M 96,530 3,919 92,611 70,491 4,717 65,774 26,039 -798 26,837 36.9 -16.9 40.8
P 915,967 59,765 856,202 799,990 77,734 722,256 115,977 -17,969 133,946 14.5 -23.1 18.5
JUNE M 157,657 6,675 150,982 129,382 4,402 124,980 28,275 2,273 26,002 21.9 51.6 20.8
4th Quarter 343,169 15,913 327,256 266,279 16,040 250,239 76,890 -127 77,017 28.9 -0.8 30.8
Upto 4th Qtr 1,073,624 66,440 1,007,184 929,372 82,136 847,236 144,252 -15,696 159,948 15.5 -19.1 18.9
4355 - 43 -
43
DIRECT TAXES
TWO YEAR COMPARATIVE - MONTH TO MONTH & PROGRESSIVE COLLECTION
MONTHS FY 2007-08 FY 2006-07 COMPARISON COMPARISON AS %
AGE
GROSS Reb /
Ref NET GROSS Reb / Ref NET GROSS
Reb /
Ref NET GROSS
Reb
/ Ref NET
1 2 3 4 5 6 7 8 9 10 11 12 13
JULY M 15,197 1,087 14,110 11,619 1,533 10,086 3,578 -446 4,024 30.8 -29 39.9
AUGUST M 15,401 394 15,007 12,941 1,831 11,110 2,460 -1,437 3,897 19.0 -78 35.1
P 30,598 1,481 29,117 24,560 3,364 21,196 6,038 -1,883 7,921 24.6 -56 37.4
SEPTEMBER M 51,106 2,691 48,415 52,021 6,741 45,280 -915 -4,050 3,135 -1.8 -60 6.9
1st Quarter 81,704 4,172 77,532 76,581 10,105 66,476 5,123 -5,933 11,056 6.7 -59 16.6
OCTOBER M 17,625 464 17,161 17,946 1,880 16,066 -321 -1,416 1,095 -1.8 -75 6.8
P 99,329 4,636 94,693 94,527 11,985 82,542 4,802 -7,349 12,151 5.1 -61 14.7
NOVEMBER M 20,219 1,499 18,720 17,433 3,508 13,925 2,786 -2,009 4,795 16.0 -57 34.4
P 119,548 6,135 113,413 111,960 15,493 96,467 7,588 -9,358 16,946 6.8 -60 17.6
DECEMBER M 58,478 7,296 51,182 80,444 4,212 76,232 -21,966 3,084 -25,050 -27.3 73 -32.9
2nd Quarter 96,322 9,259 87,063 115,823 9,600 106,223 -19,501 -341 -19,160 -16.8 -4 -18.0
Upto 2nd Qtr 178,026 13,431 164,595 192,404 19,705 172,699 -14,378 -6,274 -8,104 -7.5 -32 -4.7
JANUARY M 31,116 4,046 27,070 13,527 1,070 12,457 17,589 2,976 14,613 130.0 278 117.3
P 209,142 17,477 191,665 205,931 20,775 185,156 3,211 -3,298 6,509 1.6 -16 3.5
FEBRUARY M 25,586 568 25,018 14,772 992 13,780 10,814 -424 11,238 73.2 -43 81.6
P 234,728 18,045 216,683 220,703 21,767 198,936 14,025 -3,722 17,747 6.4 -17 8.9
MARCH M 43,140 2,185 40,955 42,779 3,914 38,865 361 -1,729 2,090 0.8 -44 5.4
3rd Quarter 99,842 6,799 93,043 71,078 5,976 65,102 28,764 823 27,941 40.5 14 42.9
Upto 3rd Qtr 277,868 20,230 257,638 263,482 25,681 237,801 14,386 -5,451 19,837 5.5 -21 8.3
APRIL M 28,254 1,339 26,915 17,821 2,741 15,080 10,433 -1,402 11,835 58.5 -51 78.5
P 306,122 21,569 284,553 281,303 28,422 252,881 24,819 -6,853 31,672 8.8 -24 12.5
MAY M 29,503 1,291 28,212 20,803 978 19,825 8,700 313 8,387 41.8 32 42.3
P 335,625 22,860 312,765 302,106 29,400 272,706 33,519 -6,540 40,059 11.1 -22 14.7
JUNE M 77,682 2,960 74,722 63,864 2,833 61,031 13,818 127 13,691 21.6 4 22.4
4th Quarter 135,439 5,590 129,849 102,488 6,552 95,936 32,951 -962 33,913 32.2 -15 35.3
Upto 4th Qtr 413,307 25,820 387,487 365,970 32,233 333,737 47,337 -6,413 53,750 12.9 -20 16.1
4455 - 44 -
44
INDIRECT TAXES
TWO YEAR COMPARATIVE - MONTH TO MONTH & PROGRESSIVE COLLECTION
Rs. Million
MONTHS FY 2007-08 FY 2006-07 COMPARISON COMPARISON AS %
AGE
GROSS Reb /
Ref NET GROSS
Reb /
Ref NET GROSS
Reb /
Ref NET GROSS
Reb /
Ref NET
1 2 3 4 5 6 7 8 9 10 11 12 13
JULY M 40,672 3,841 36,831 42,849 6,757 36,092 -2,177 -2,916 739 -5.1 -43.2 2.0
AUGUST M 47,639 2,507 45,132 41,075 5,852 35,223 6,564 -3,345 9,909 16.0 -57.2 28.1
P 88,311 6,348 81,963 83,924 12,609 71,315 4,387 -6,261 10,648 5.2 -49.7 14.9
SEPTEMBER M 49,556 3,915 45,641 49,526 3,380 46,146 30 535 -505 0.1 15.8 -1.1
1st Quarter 137,867 10,263 127,604 133,450 15,989 117,461 4,417 -5,726 10,143 3.3 -35.8 8.6
OCTOBER M 52,173 2,946 49,227 42,453 5,207 37,246 9,720 -2,261 11,981 22.9 -43.4 32.2
P 190,040 13,209 176,831 175,903 21,196 154,707 14,137 -7,987 22,124 8.0 -37.7 14.3
NOVEMBER M 53,193 3,370 49,823 49,646 4,544 45,102 3,547 -1,174 4,721 7.1 -25.8 10.5
P 243,233 16,579 226,654 225,549 25,740 199,809 17,684 -9,161 26,845 7.8 -35.6 13.4
DECEMBER M 48,152 4,325 43,827 43,418 5,414 38,004 4,734 -1,089 5,823 10.9 -20.1 15.3
2nd Quarter 153,518 10,641 142,877 135,517 15,165 120,352 18,001 -4,524 22,525 13.3 -29.8 18.7
Upto 2nd Qtr 291,385 20,904 270,481 268,967 31,154 237,813 22,418 -0,250 32,668 8.3 -32.9 13.7
JANUARY M 54,089 3,618 50,471 42,067 2,364 39,703 12,022 1,254 10,768 28.6 53.0 27.1
P 345,474 24,522 320,952 311,034 33,518 277,516 34,440 -8,996 43,436 11.1 -26.8 15.7
FEBRUARY M 50,280 2,532 47,748 42,058 3,412 38,646 8,222 -880 9,102 19.5 -25.8 23.6
P 395,754 27,054 368,700 353,092 36,930 316,162 42,662 -9,876 52,538 12.1 -26.7 16.6
MARCH M 56,833 3,243 53,590 46,519 3,485 43,034 10,314 -242 10,556 22.2 -6.9 24.5
3rd Quarter 161,202 9,393 151,809 130,644 9,261 121,383 30,558 132 30,426 23.4 1.4 25.1
Upto 3rd Qtr 452,587 30,297 422,290 399,611 40,415 359,196 52,976 -0,118 63,094 13.3 -25.0 17.6
APRIL M 60,728 3,980 56,748 48,585 4,180 44,405 12,143 -200 12,343 25.0 -4.8 27.8
P 513,315 34,277 479,038 448,196 44,595 403,601 65,119 -0,318 75,437 14.5 -23.1 18.7
MAY M 67,027 2,628 64,399 49,688 3,739 45,949 17,339 -1,111 18,450 34.9 -29.7 40.2
P 580,342 36,905 543,437 497,884 48,334 449,550 82,458 -1,429 93,887 16.6 -23.6 20.9
JUNE M 79,975 3,715 76,260 65,518 1,569 63,949 14,457 2,146 12,311 22.1 136.8 19.3
4th Quarter 207,730 10,323 197,407 163,791 9,488 154,303 43,939 835 43,104 26.8 8.8 27.9
Upto 4th Qtr 660,317 40,620 619,697 563,402 49,903 513,499 96,915 -9,283 106,198 17.2 -18.6 20.7
4555 - 45 -
45
SALES TAX (TOTAL)
TWO YEAR COMPARATIVE - MONTH TO MONTH & PROGRESSIVE COLLECTION
MONTHS FY 2007-08 FY 2006-07 COMPARISON COMPARISON AS % AGE
GROSS Reb / Ref
NET GROSS Reb / Ref
NET GROSS Reb / Ref
NET GROSS Reb / Ref
NET
1 2 3 4 5 6 7 8 9 10 11 12 13
JULY M 29,188 2,954 26,234 28,688 4,664 24,024 500 -1,710 2,210 1.7 -36.7 9.2
AUGUST M 30,537 1,690 28,847 25,247 4,332 20,915 5,290 -2,642 7,932 21.0 -61.0 37.9
P 59,725 4,644 55,081 53,935 8,996 44,939 5,790 -4,352 10,142 10.7 -48.4 22.6
SEPTEMBER M 30,679 3,008 27,671 32,910 2,264 30,646 -2,231 744 -2,975 -6.8 32.9 -9.7
1st Quarter 90,404 7,652 82,752 86,845 11,260 75,585 3,559 -3,608 7,167 4.1 -32.0 9.5
OCTOBER M 33,420 1,914 31,506 26,031 4,057 21,974 7,389 -2,143 9,532 28.4 -52.8 43.4
P 123,824 9,566 114,258 112,876 15,317 97,559 10,948 -5,751 16,699 9.7 -37.5 17.1
NOVEMBER M 32,243 2,503 29,740 31,760 3,630 28,130 483 -1,127 1,610 1.5 -31.0 5.7
P 156,067 12,069 143,998 144,636 18,947 125,689 11,431 -6,878 18,309 7.9 -36.3 14.6
DECEMBER M 28,335 3,017 25,318 24,683 4,135 20,548 3,652 -1,118 4,770 14.8 -27.0 23.2
2nd Quarter 93,998 7,434 86,564 82,474 11,822 70,652 11,524 -4,388 15,912 14.0 -37.1 22.5
Upto 2nd Qtr 184,402 15,086 169,316 169,319 23,082 146,237 15,083 -7,996 23,079 8.9 -34.6 15.8
JANUARY M 31,979 2,072 29,907 26,406 1,620 24,786 5,573 452 5,121 21.1 27.9 20.7
P 216,381 17,158 199,223 195,725 24,702 171,023 20,656 -7,544 28,200 10.6 -30.5 16.5
FEBRUARY M 30,344 1,506 28,838 26,223 2,507 23,716 4,121 -1,001 5,122 15.7 -39.9 21.6
P 246,725 18,664 228,061 221,948 27,209 194,739 24,777 -8,545 33,322 11.2 -31.4 17.1
MARCH M 32,818 2,266 30,552 26,649 2,573 24,076 6,169 -307 6,476 23.1 -11.9 26.9
3rd Quarter 95,141 5,844 89,297 79,278 6,700 72,578 15,863 -856 16,719 20.0 -12.8 23.0
Upto 3rd Qtr 279,543 20,930 258,613 248,597 29,782 218,815 30,946 -8,852 39,798 12.4 -29.7 18.2
APRIL M 37,281 2,240 35,041 30,305 3,328 26,977 6,976 -1,088 8,064 23.0 -32.7 29.9
P 316,824 23,170 293,654 278,902 33,110 245,792 37,922 -9,940 47,862 13.6 -30.0 19.5
MAY M 41,040 1,600 39,440 30,414 2,989 27,425 10,626 -1,389 12,015 34.9 -46.5 43.8
P 357,864 24,770 333,094 309,316 36,099 273,217 48,548 -11,329 59,877 15.7 -31.4 21.9
JUNE M 47,242 3,405 43,837 37,109 930 36,179 10,133 2,475 7,658 27.3 266.1 21.2
4th Quarter 125,563 7,245 118,318 97,828 7,247 90,581 27,735 -2 27,737 28.4 0.0 30.6
Upto 4th Qtr 405,106 28,175 376,931 346,425 37,029 309,396 58,681 -8,854 67,535 16.9 -23.9 21.8
4655 - 46 -
46
SALES TAX (DOMESTIC)
TWO YEAR COMPARATIVE - MONTH TO MONTH & PROGRESSIVE COLLECTION
MONTHS FY 2007-08 FY 2006-07 COMPARISON COMPARISON AS % AGE
GROSS Reb /
Ref NET GROSS
Reb /
Ref NET GROSS
Reb /
Ref NET GROSS
Reb /
Ref NET
1 2 3 4 5 6 7 8 9 10 11 12 13
JULY M 13,884 2,948 10,936 13,571 4,656 8,915 313 -1,708 2,021 2.3 -36.7 22.7
AUGUST M 14,518 1,664 12,854 10,395 4,329 6,066 4,123 -2,665 6,788 39.7 -61.6 111.9
P 28,402 4,612 23,790 23,966 8,985 14,981 4,436 -4,373 8,809 18.5 -48.7 58.8
SEPTEMBER M 14,414 3,005 11,409 18,118 2,255 15,863 -3,704 750 -4,454 -20.4 33.3 -28.1
1st Quarter 42,816 7,617 35,199 42,084 11,240 30,844 732 -3,623 4,355 1.7 -32.2 14.1
OCTOBER M 15,890 1,914 13,976 14,596 4,051 10,545 1,294 -2,137 3,431 8.9 -52.8 32.5
P 58,706 9,531 49,175 56,680 15,291 41,389 2,026 -5,760 7,786 3.6 -37.7 18.8
NOVEMBER M 14,394 2,499 11,895 15,390 3,627 11,763 -996 -1,128 132 -6.5 -31.1 1.1
P 73,100 12,030 61,070 72,070 18,918 53,152 1,030 -6,888 7,918 1.4 -36.4 14.9
DECEMBER M 16,188 3,012 13,176 11,891 4,118 7,773 4,297 -1,106 5,403 36.1 -26.9 69.5
2nd Quarter 46,472 7,425 39,047 41,877 11,796 30,081 4,595 -4,371 8,966 11.0 -37.1 29.8
Upto 2nd Qtr 89,288 15,042 74,246 83,961 23,036 60,925 5,327 -7,994 13,321 6.3 -34.7 21.9
JANUARY M 14,556 2,052 12,504 13,703 1,619 12,084 853 433 420 6.2 26.7 3.5
P 103,844 17,094 86,750 97,664 24,655 73,009 6,180 -7,561 13,741 6.3 -30.7 18.8
FEBRUARY M 16,797 1,504 15,293 12,600 2,504 10,096 4,197 -1,000 5,197 33.3 -39.9 51.5
P 120,641 18,598 102,043 110,264 27,159 83,105 10,377 -8,561 18,938 9.4 -31.5 22.8
MARCH M 17,124 2,261 14,863 12,547 2,569 9,978 4,577 -308 4,885 36.5 -12.0 49.0
3rd Quarter 48,477 5,817 42,660 38,850 6,692 32,158 9,627 -875 10,502 24.8 -13.1 32.7
Upto 3rd Qtr 137,765 20,859 116,906 122,811 29,728 93,083 14,954 -8,869 23,823 12.2 -29.8 25.6
APRIL M 21,010 2,225 18,785 14,838 3,327 11,511 6,172 -1,102 7,274 41.6 -33.1 63.2
P 158,775 23,084 135,691 137,649 33,055 104,594 21,126 -9,971 31,097 15.3 -30.2 29.7
MAY M 21,671 1,597 20,074 13,838 2,974 10,864 7,833 -1,377 9,210 56.6 -46.3 84.8
P 180,446 24,681 155,765 151,487 36,029 115,458 28,959 -11,348 40,307 19.1 -31.5 34.9
JUNE M 29,217 3,405 25,812 18,958 929 18,029 10,259 2,476 7,783 54.1 266.5 43.2
4th Quarter 71,898 7,227 64,671 47,634 7,230 40,404 24,264 -3 24,267 50.9 0.0 60.1
Upto 4th Qtr 209,663 28,086 181,577 170,445 36,958 133,487 39,218 -8,872 48,090 23.0 -24.0 36.0
4755 - 47 -
47
SALES TAX (IMPORT)
TWO YEAR COMPARATIVE - MONTH TO MONTH & PROGRESSIVE COLLECTION
MONTHS FY 2007-08 FY 2006-07 COMPARISON COMPARISON AS % AGE
GROSS Reb / Ref NET GROSS Reb /
Ref NET GROSS Reb / Ref NET GROSS Reb / Ref NET
1 2 3 4 5 6 7 8 9 10 11 12 13
JULY M 15,304 6 15,298 15,117 8 15,109 187 -2 189 1.2 -25.0 1.3
AUGUST M 16,019 26 15,993 14,852 3 14,849 1,167 23 1,144 7.9 766.7 7.7
P 31,323 32 31,291 29,969 11 29,958 1,354 21 1,333 4.5 190.9 4.4
SEPTEMBER M 16,265 3 16,262 14,792 9 14,783 1,473 -6 1,479 10.0 -66.7 10.0
1st Quarter 47,588 35 47,553 44,761 20 44,741 2,827 15 2,812 6.3 75.0 6.3
OCTOBER M 17,530 0 17,530 11,435 6 11,429 6,095 -6 6,101 53.3 -100.0 53.4
P 65,118 35 65,083 56,196 26 56,170 8,922 9 8,913 15.9 34.6 15.9
NOVEMBER M 17,849 4 17,845 16,370 3 16,367 1,479 1 1,478 9.0 33.3 9.0
P 82,967 39 82,928 72,566 29 72,537 10,401 10 10,391 14.3 34.5 14.3
DECEMBER M 12,147 5 12,142 12,792 17 12,775 -645 -12 -633 -5.0 -70.6 -5.0
2nd Quarter 47,526 9 47,517 40,597 26 40,571 6,929 -17 6,946 17.1 -65.4 17.1
Upto 2nd Qtr 95,114 44 95,070 85,358 46 85,312 9,756 -2 9,758 11.4 -4.3 11.4
JANUARY M 17,423 20 17,403 12,703 1 12,702 4,720 19 4,701 37.2 1,900.0 37.0
P 112,537 64 112,473 98,061 47 98,014 14,476 17 14,459 14.8 36.2 14.8
FEBRUARY M 13,547 2 13,545 13,623 3 13,620 -76 -1 -75 -0.6 -33.3 -0.6
P 126,084 66 126,018 111,684 50 111,634 14,400 16 14,384 12.9 32.0 12.9
MARCH M 15,694 5 15,689 14,102 4 14,098 1,592 1 1,591 11.3 25.0 11.3
3rd Quarter 46,664 27 46,637 40,428 8 40,420 6,236 19 6,217 15.4 237.5 15.4
Upto 3rd Qtr 141,778 71 141,707 125,786 54 125,732 15,992 17 15,975 12.7 31.5 12.7
APRIL M 16,271 15 16,256 15,467 1 15,466 804 14 790 5.2 1,400.0 5.1
P 158,049 86 157,963 141,253 55 141,198 16,796 31 16,765 11.9 56.4 11.9
MAY M 19,369 3 19,366 16,576 15 16,561 2,793 -12 2,805 16.8 -80.0 16.9
P 177,418 89 177,329 157,829 70 157,759 19,589 19 19,570 12.4 27.1 12.4
JUNE M 18,025 0 18,025 18,151 1 18,150 -126 -1 -125 -0.7 -100.0 -0.7
4th Quarter 53,665 18 53,647 50,194 17 50,177 3,471 1 3,470 6.9 5.9 6.9
Upto 4th Qtr 195,443 89 195,354 175,980 71 175,909 19,463 18 19,445 11.1 25.4 11.1
4855 - 48 -
48
CUSTOMS
TWO YEAR COMPARATIVE - MONTH TO MONTH & PROGRESSIVE COLLECTION
MONTHS FY 2007-08 FY 2006-07 COMPARISON COMPARISON AS % AGE
GROSS Reb /
Ref NET GROSS
Reb /
Ref NET GROSS
Reb /
Ref NET GROSS
Reb /
Ref NET
1 2 3 4 5 6 7 8 9 10 11 12 13
JULY M 9,625 887 8,738 10,156 2,080 8,076 -531 -1,193 662 -5.2 -57.4 8.2
AUGUST M 10,547 817 9,730 11,193 1,482 9,711 -646 -665 19 -5.8 -44.9 0.2
P 20,172 1,704 18,468 21,349 3,562 17,787 -1,177 -1,858 681 -5.5 -52.2 3.8
SEPTEMBER M 11,407 899 10,508 11,216 1,113 10,103 191 -214 405 1.7 -19.2 4.0
1st Quarter 31,579 2,603 28,976 32,565 4,675 27,890 -986 -2,072 1,086 -3.0 -44.3 3.9
OCTOBER M 11,205 1,032 10,173 10,948 1,147 9,801 257 -115 372 2.3 -10.0 3.8
P 42,784 3,635 39,149 43,513 5,822 37,691 -729 -2,187 1,458 -1.7 -37.6 3.9
NOVEMBER M 12,646 867 11,779 12,328 875 11,453 318 -8 326 2.6 -0.9 2.8
P 55,430 4,502 50,928 55,841 6,697 49,144 -411 -2,195 1,784 -0.7 -32.8 3.6
DECEMBER M 12,012 1,296 10,716 12,875 1,276 11,599 -863 20 -883 -6.7 1.6 -7.6
2nd Quarter 35,863 3,195 32,668 36,151 3,298 32,853 -288 -103 -185 -0.8 -3.1 -0.6
Upto 2nd Qtr 67,442 5,798 61,644 68,716 7,973 60,743 -1,274 -2,175 901 -1.9 -27.3 1.5
JANUARY M 15,324 1,545 13,779 10,339 743 9,596 4,985 802 4,183 48.2 107.9 43.6
P 82,766 7,343 75,423 79,055 8,716 70,339 3,711 -1,373 5,084 4.7 -15.8 7.2
FEBRUARY M 12,219 1,020 11,199 10,243 901 9,342 1,976 119 1,857 19.3 13.2 19.9
P 94,985 8,363 86,622 89,298 9,617 79,681 5,687 -1,254 6,941 6.4 -13.0 8.7
MARCH M 16,233 977 15,256 13,889 910 12,979 2,344 67 2,277 16.9 7.4 17.5
3rd Quarter 43,776 3,542 40,234 34,471 2,554 31,917 9,305 988 8,317 27.0 38.7 26.1
Upto 3rd Qtr 111,218 9,340 101,878 103,187 10,527 92,660 8,031 -1,187 9,218 7.8 -11.3 9.9
APRIL M 14,677 1,740 12,937 11,256 843 10,413 3,421 897 2,524 30.4 106.4 24.2
P 125,895 11,080 114,815 114,443 11,370 103,073 11,452 -290 11,742 10.0 -2.6 11.4
MAY M 15,968 1,022 14,946 11,945 739 11,206 4,023 283 3,740 33.7 38.3 33.4
P 141,863 12,102 129,761 126,388 12,109 114,279 15,475 -7 15,482 12.2 -0.1 13.5
JUNE M 21,134 306 20,828 18,649 629 18,020 2,485 -323 2,808 13.3 -51.4 15.6
4th Quarter 51,779 3,068 48,711 41,850 2,211 39,639 9,929 857 9,072 23.7 38.8 22.9
Upto 4th Qtr 162,997 12,408 150,589 145,037 12,738 132,299 17,960 -330 18,290 12.4 -2.6 13.8
4955 - 49 -
49
FEDERAL EXCISE
TWO YEAR COMPARATIVE - MONTH TO MONTH & PROGRESSIVE COLLECTION
MONTHS FY 2007-08 FY 2006-07 COMPARISON COMPARISON AS % AGE
GROSS Reb / Ref NET GROSS Reb / Ref NET GROSS Reb / Ref NET GROSS Reb / Ref NET
1 2 3 4 5 6 7 8 9 10 11 12 13
JULY M 1,859 0 1,859 4,005 13 3,992 -2,146 -13 -2,133 -53.6 -100.0 -53.4
AUGUST M 6,555 0 6,555 4,635 38 4,597 1,920 -38 1,958 41.4 -100.0 42.6
P 8,414 0 8,414 8,640 51 8,589 -226 -51 -175 -2.6 -100.0 -2.0
SEPTEMBER M 7,470 8 7,462 5,400 3 5,397 2,070 5 2,065 38.3 166.7 38.3
1st Quarter 15,884 8 15,876 14,040 54 13,986 1,844 -46 1,890 13.1 -85.2 13.5
OCTOBER M 7,548 0 7,548 5,474 3 5,471 2,074 -3 2,077 37.9 -100.0 38.0
P 23,432 8 23,424 19,514 57 19,457 3,918 -49 3,967 20.1 -86.0 20.4
NOVEMBER M 8,304 0 8,304 5,558 39 5,519 2,746 -39 2,785 49.4 -100.0 50.5
P 31,736 8 31,728 25,072 96 24,976 6,664 -88 6,752 26.6 -91.7 27.0
DECEMBER M 7,805 12 7,793 5,860 3 5,857 1,945 9 1,936 33.2 300.0 33.1
2nd Quarter 23,657 12 23,645 16,892 45 16,847 6,765 -33 6,798 40.0 -73.3 40.4
Upto 2nd Qtr 39,541 20 39,521 30,932 99 30,833 8,609 -79 8,688 27.8 -79.8 28.2
JANUARY M 6,786 1 6,785 5,322 1 5,321 1,464 0 1,464 27.5 0.0 27.5
P 46,327 21 46,306 36,254 100 36,154 10,073 -79 10,152 27.8 -79.0 28.1
FEBRUARY M 7,717 6 7,711 5,592 4 5,588 2,125 2 2,123 38.0 50.0 38.0
P 54,044 27 54,017 41,846 104 41,742 12,198 -77 12,275 29.1 -74.0 29.4
MARCH M 7,782 0 7,782 5,981 2 5,979 1,801 -2 1,803 30.1 -100.0 30.2
3rd Quarter 22,285 7 22,278 16,895 7 16,888 5,390 0 5,390 31.9 0.0 31.9
Upto 3rd Qtr 61,826 27 61,799 47,827 106 47,721 13,999 -79 14,078 29.3 -74.5 29.5
APRIL M 8,770 0 8,770 7,024 9 7,015 1,746 -9 1,755 24.9 -100.0 25.0
P 70,596 27 70,569 54,851 115 54,736 15,745 -88 15,833 28.7 -76.5 28.9
MAY M 10,019 6 10,013 7,329 11 7,318 2,690 -5 2,695 36.7 -45.5 36.8
P 80,615 33 80,582 62,180 126 62,054 18,435 -93 18,528 29.6 -73.8 29.9
JUNE M 11,599 4 11,595 9,760 10 9,750 1,839 -6 1,845 18.8 -60.0 18.9
4th Quarter 30,388 10 30,378 24,113 30 24,083 6,275 -20 6,295 26.0 -66.7 26.1
Upto 4th Qtr 92,214 37 92,177 71,940 136 71,804 20,274 -99 20,373 28.2 -72.8 28.4
